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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.

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.


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.

SEC Obtains Emergency Asset Freeze, Charges Actor with Operating a $690 Million Ponzi Scheme

The Securities and Exchange Commission reported on April 6, 2021 that it had secured an asset freeze and other urgent relief in an emergency compliance action against Los Angeles-based actor Zachary Horwitz and his firm, 1inMM (one in a million) Capital, LLC, in connection with an alleged Ponzi scheme that raised over $690 million. Horwitz and 1inMM reportedly told investors that they were purchasing film rights with the intent of reselling them to Netflix and HBO; however, 1inMM had no commercial arrangement with either group.

Horwitz reportedly gave investors fabricated agreements and emails relating to the suspected HBO and Netflix sales. Horwitz guaranteed excessive returns and made them seem possible by using the titles of two well-known film firms and fabricating records. Horwitz misappropriated investment funds for personal use, including the purchasing of his multi-million dollar home, flights to Las Vegas, and payment to a millionaire interior designer. Horwitz falsely claimed to have a track record of successfully selling movie rights to Netflix and HBO when in fact neither Horwitz nor 1inMM had ever sold or done business with these two companies.

The SEC accused Horwitz and 1inMM of violating the antifraud provisions of the federal securities laws. The fact of the matter is that there is nothing unusual about this scam.  Simply put, there was an abundance of people looking to invest money without engaging in adequate due diligence.  As long as investors are willing to be naïve with their savings, there will always be someone out there hawking returns that seem to good to be true.

Alabama Securities Commission issued a Cease and Desist order against Mail-Shops and Ronald Scott

On December 1, 2020, the Alabama Securities Commission issued a Cease and Desist order against Mail-Shops and Ronald Scott.  The Commission sought to put a stop to the Respondents’ solicitation of Alabama residents to invest in a variety of sectors, including real estate, oil, coal, electricity, automotive, aviation, and manufacturing. MailShops and Scott sent mass phishing emails to Alabama residents. In the emails, Scott indicated that for more details about the projects and cash distributions, interested investors should “get in touch… ASAP For further proceedings and funding.”

As of December 2, 2020, Alabama’s registration files revealed no efforts to register either Mail-Shops or Ronald Scott.  Doing business in Alabama as an unregistered investment advisor is a violation of Alabama law.  As a result of their illegal conduct in Alabama, the Respondents were ordered to cease and desist from further violations of Alabama law.

This case illustrates how easily vulnerable adults can be exploited through simple email communications.  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.