News and Articles

Call 800-718-1422 or email daw@stockbrokerlitigation.com

South Florida Stockbroker Indicted and Charged With Stealing From Client

On January 21, 2022, the Securities and Exchange Commission filed a complaint in the U.S. District Court for the Southern District of Florida against German Nino, a former investment advisor with UBS Financial Services, Inc.

The SEC alleges that, over a period of 6 years, Nino stole approximately $5.8 million from an advisory client. The client invested $11 million with UBS through Nino. He gradually wired large sums of money into a personal account. This account was, naturally, separate from his shared marital accounts, as Nino spent most of the money ($4.6 million) on various gifts for women with whom he was having affairs. These gifts ranged from vacations to luxury cars to an apartment in Colombia. The rest of the funds went towards paying back another client from whom he previously stole.

Nino doctored account statements to conceal his fraud. In meetings with the client, he lied about account performance and account balances to perpetuate his scheme. Nino’s crimes were not revealed until the client’s son noticed discrepancies in the accounts.

One must always remain diligent in regard to one’s investments. If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

SEC Charges Wedbush Securities with Unregistered Sales of Microcap Securities and Failing to Report Suspicious Transactions

The SEC announced that Wedbush has agreed to pay more than $1.2 million to settle charges arising from the unlawful, unregistered distribution of nearly 100 million shares of more than 50 different microcap companies.  In addition, Wedbush failed to file suspicious activity reports (SARs) in reference to these transactions.

According to the SEC’s Order, Wedbush engaged in unregistered offers and sales of large blocks of low-priced securities by an offshore customer.  Wedbush held a brokerage account for Silverton SA, now known as Wintercap, S, a purported Swiss assets manager.  The activity in Silverton’s account reflected a pattern of depositing them low priced securities, selling a large quantity of these shares soon after depositing them and withdrawing the proceeds.  Silverton’s business model enabled individuals or groups scheming to conceal their ownership of and control over public companies to fraudulently sell stock to investors.  Despite the presence of numerous red flags that Wedbush had identified in its written guidance to employees, it failed to file SARs for the transactions it executed on behalf of its offshore customer, as required to do when transactions are suspected to involve fraudulent activity.

Wedbush agreed to cease and desist from committing or causing violations of these provisions; to be censured; payment of disgorgement and prejudgment interest of over $207,000 and a civil penalty of $1 million.  Additionally, in 2018, the SEC and US Attorney’s Office for the District of Massachusetts brought parallel actions against a number of related parties, including Silverton’s principal, Roger Knox, for the alleged fraudulent scheme.

If you wish to discuss any securities related questions, please contact David A. Weintraub, P.A. 7805 SW 6th Court, Plantation, FL  33324.  By phone 954-693-7577 or 800-718-1422.

FINRA Barred Former LPL Broker who Allegedly Misappropriated Funds from an Elderly Client

On October 7, 2021 FINRA announced that it had barred Eric Shea Hollifield, a former LPL Broker, who allegedly converted a senior client’s funds, after he refused to cooperate with FINRA’s investigation into his conduct.

According to FINRA, an investigation was launched into Hollifield after an elderly client filed an arbitration alleging Hollifield misappropriated $1,240,000.  Consequently, LPL fired Hollifield on September 10 for failure to disclose an outside business activity.  On October 7, 2021, FINRA filed an Letter of Acceptance, Waiver and Consent where Hollifield agreed without admitting or denying the findings of the FINRA’s investigation, to be barred from the industry.  The customer’s FINRA arbitration remains pending.

This case illustrates how easily vulnerable adults can be exploited by unscrupulous professionals.  If you have elderly friends or relatives who may be vulnerable, please take whatever steps you can to protect them from this type of exploitation.  If you wish to discuss any securities related questions, please contact David A. Weintraub, P.A. 7805SW 6th Court, Plantation, FL  33324.  By phone 954-693-7577 or 800-718-1422.

FINRA Barred PFS Investment Broker, Jeffrey Dampf, for Defrauding Elderly Clients

On October 1, 2021, FINRA announced that it barred former PFS Investments Inc. broker, Jeffrey Dampf, from the securities industry.  As part of the settlement, Dampf consented to the sanction and to the entry of findings via a Letter of Acceptance, Waiver, and Consent, after FINRA alleged that Dampf refuse to cooperate with its investigation into allegations that he stole money from an elderly client. Dampf did not testify or turn over documents to FINRA in its investigation of the matter, according to the order.

According to the investigation, about a year ago, Dampf, 70, was charged with attempted theft, alleging that he, in his capacity as the power of attorney and accountant for two elderly siblings, was misappropriating funds entrusted to him for the care of the two elderly victims.  “Dampf attempted to electronically transfer $500,000 to an investment account from the elderly victim’s bank account for his own personal benefit,” according to the Ocean County Prosecutor’s Office in New Jersey.  “Basically, I’m going to fight this whole thing, not with FINRA but the courts,” Dampf said in an interview. “I haven’t taken a nickel.”   “I was the power of attorney,” he said. “The caregivers were stealing left and right.”

This case illustrates how easily vulnerable adults can be exploited by unscrupulous professionals.  If you have elderly friends or relatives who may be vulnerable, please take whatever steps you can to protect them from this type of exploitation.  If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422

SEC Charges Former Executives of TCA Fund Management Group Corp.

On September 30, 2021, the SEC charged Robert D. Press, the former CEO, and Donna M. Silverman, the former Chief Portfolio Manager of TCA Fund Management Group, Corp.  for their alleged roles in the firm’s scheme to artificially inflate values and performance results of several of the firm’s funds.

According to the SEC investigation, Press allegedly recorded non-binding transactions and fraudulent investment banking fees in the fund’s books and records.  Subsequently, the inflated asset values and false performance results were included in promotional materials and account statements distributed to the TCA funds’ current and prospective investors, creating a false sense of having positive monthly returns.  In fact, the funds had at least 34 months of negative returns since inception.

According to the Director of the SEC’s Miami Regional Office “Press and TCA gave investors a false portrayal of the TCA Funds’ investment success, with Press profiting from this misinformation.”   Without admitting or denying the SEC’s findings, Press and Silverman each agreed to the entry of a cease-and-desist order.  In addition, Press agreed to be barred from the securities industry, and to pay disgorgement of overcharged management and performance fees he received of $4,409,546 plus interest and penalties.  Silverman agreed to a limitation on activities from acting in a director or officer capacity in the securities industry, and to pay a penalty of $50,000.

 

Seeman Holtz Lawsuits

Several lawsuits have been filed during recent weeks alleging that Florida financial firm Seeman Holtz (SH) defrauded investors. The suits allege that SH sold unregistered securities to unsuspecting and unsophisticated investors, many of whom were in their 90’s.  The investments were purportedly life insurance-backed promissory notes.  Not only were the notes not registered as securities, SH has never been a registered brokerage dealer, and its salesmen were not registered associated persons.

The lawsuits allege that SH’s salesmen visited upscale communities and preyed on elderly investors who wanted stable and secure investments. SH told investors that “the Notes were safe and secure and would be collateralized by a portfolio of life insurance policies which would provide safety of principal and substantial returns.” Investors were assured that their promissory notes would be “liquid and that they would be repaid upon maturity.” One of SH’s clients had purchased multiple notes, of which the client’s suit details two. One note matured in January of 2019 and the other matured a year later. These notes were collectively worth approximately $226,000 and have since defaulted.

It should be noted that Eric Holtz, a cofounder of SH and a defendant in the lawsuits at hand, committed suicide earlier this month.

In one of the pending lawsuits, the Florida Office of Financial Regulation accuses SH of running a “ponzi-type” scheme, accusing the firm of various violations of Florida’s blue-sky statute, including fraud.  As of this date, the SEC has not publicly announced whether it is investigating Seeman Holtz.

If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

Herbert J. Sims & Co. Ordered to Cease and Desist

On July 30, 2021, the U.S. Securities and Exchange Commission issued a cease-and-desist order against investment firm Herbert J. Sims & Co., Inc “HJS”.  The SEC found that between January 2015 and April 2018 HJS made unsuitable investment recommendations to forty-five customers.  Thirteen registered brokers at HJS’s Boca Raton, Florida branch recommended certain high-risk and highly sophisticated variable interest rate structured products “VRSPs” to forty-five customers.  Brokers are required to determine whether an investment is in their client’s best financial interests.  All of the VRSPs recommended and sold to the clients at issue had maturity periods of at least fifteen years.  Notwithstanding this, the product was sold to elderly clients.  VRSPs are “principal-at-risk” securities, meaning that investors can lose part of or their entire principal.  The HJS brokers recommended these VRSPs to elderly clients with low risk tolerance and low annual income.  In one example, an HJS broker “recommended the purchase of over $30,000 in VRSPs to a 69-year-old customer with a low risk tolerance, an investment objective of income, an annual income of less than $25,000, and a net worth of less than $185,000.”

The SEC ordered HJS to hire an independent consultant to review its policies and procedures that are designed to prevent and detect unsuitable recommendations.  The SEC also fined HJS $250,000.

If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

The Arizona Corporation Commission ordered Jayson Papa, David Miller and Associates to Pay Restitution

On May 18, 2021, the securities division of the Arizona Corporation Commission ordered Jayson Papa, David Miller, and associates to pay restitution and penalties for defrauding investors. Miller operated a company called Meroe Capital Group Ltd. which was retained by Papa’s company, Castle International, LLC. The respondents in the ACC’s order offered and sold securities in the form of at least 22 notes to at least l1 investors, for a total of at least $1,119,425. All of the securities were unregistered and were all fraudulent.

Miller found investors by approaching strangers in public places, such as gyms and restaurants. He told offerees that Castle International was “an exciting company that conducted medical transports domestically and did rescue missions outside the U.S. Miller claimed that Meroe, his “firm,” was a serious Wall Street investment firm. The company’s website and materials featured a Wall Street address, which was in reality a virtual office. Miller told one investor that Castle International was such an exciting company that he personally invested $200,000 in it. The investors’ notes were never fulfilled.

One must always remain diligent in regard to one’s investments. If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

 

Arizona Corporation Commission issued an order against Gutman

On May 5th, 2021, the securities division of the Arizona Corporation Commission issued an order against Jerry L. Gutman. Gutman was a broker with United Planners’ Financial Services of America. Gutman sold unregistered securities in the form of membership interests in at least six different LLCs to thirty-one clients of his firm and seven non-clients without disclosing the sales to his firm. The sales totaled over $7,000,000.

For instance, Guttman sold membership interests in Serenity Cemeteries VI, LLC to sixteen investors in exchange for $2,687,500, of which $1,678,374 has been repaid. None of the investments were registered with the ACC and none of them were recorded in United’s records.

Guttman sold membership interests in the following companies: Serenity Cemeteries II, LLC; Serenity Cemeteries IV, LLC; Serenity Cemeteries VI, LLC; Serenity VII, LLC; and Champion Entertainment Group, LLC.

Guttman was ordered to pay restitution to the investors and penalties to the State of Arizona.

One must always remain diligent in regard to one’s investments. If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

SEC Charges Felon and Six Others in Oil-and-Gas Offering Fraud

On April 14, 2021 the Securities and Exchange Commission charged seven individuals, including criminal recidivist Richard Dale Sterritt, Jr., with defrauding investors in a multimillion-dollar oil-and-gas bid racket and related market manipulation scheme.

The SEC’s complaint alleges that, between March 2018 and at least November 2020, Sterritt – who used the pseudonym “Richard Richman” – Michael Greer, Deanna Looney, Robert Magness, Jr., Katie Mathews, James Christopher Pittman, and Mark Ross raised more than $16 million from more than 300 investors through an unregistered private placement of the common stock of Zona Energy Inc., a Dallas-based company that claimed to be focused on the oil and gas industry. According to the complaint, the defendants made various false and misleading statements verbally and in offering materials to solicit investors, including that their funds would be used to support Zona’s operations, namely to develop the mineral rights on a West Texas cattle ranch. The complaint further alleges that instead of using investors’ money to capitalize Zona, Sterritt and his co-defendants misappropriated millions of dollars raised in the offering, using the funds to pay for luxury goods, rental apartments, a car, and to make cash payments to friends, family members, and Sterritt’s girlfriends. Also, according to the complaint, the offering materials falsely claimed that Zona had no debt when the company actually owed millions of dollars in demand notes to various Sterritt-controlled companies.

The Securities and Exchange Commission urges investors to check the background of anyone selling them an investment and to always independently research investment opportunities.  FINRA’s BrokerCheck website is one such source.  When verifiable information is unavailable, generally, one should walk away.