Articles Posted in Ponzi Scams

GPB Capital Sales: SSEK Files Investor Fraud Lawsuit Against Money Concepts Capital

Two investors in Alabama are pursuing a Financial Industry Regulatory Authority (FINRA) claim against Money Concepts Capital Corp. These investors sustained losses after one of the independent brokerage firm’s longtime registered representatives recommended that they purchase GPB Capital private placements. 

Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) is representing both claimants in their investor fraud claim. 

Dawn Bennett, an ex-financial advisor and broker, is sentenced to 20 years in prison for operating a $20M Ponzi scam that involved 46 investors. She also must pay $14.5M in restitution and forfeit another $14M.

Many of Bennett’s victims were retirees who heard about her because she hosted a radio show. In 2018, Bennett was convicted by a jury on federal charges of conspiracy, bank fraud, securities fraud, wire fraud, and making false statements on a loan application.

According to evidence given at trial, Bennett solicited investors for her online clothing business DJB Holdings, LLC, also known as DJBennett.com, touting a 15% yearly interest rate through promissory and convertible notes.

David Rosenberg, the CEO of Prime Automotive Group and a business partner of GPB Capital Holdings, is suing the private placement issuer in a Massachusetts Superior Court. According to Rosenberg’s complaint, GPB Capital has been operating a Ponzi-like scam that involved using investors’ funds to pay other investors and enhance its auto dealerships’ performances. Rosenberg is now the second former GPB Capital business partner to allege in public filings that GPB is essentially operating a Ponzi Scheme.

GPB Capital is a New York-based issuer of risky private placements that is invested primarily in auto dealerships and trash hauling companies. The firm has been under close scrutiny in the wake of allegations that it engaged in financial misconduct and as the value of its numerous GPB funds have dropped significantly from around $1.8 Billion down to about $1 Billion.

The U.S. Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), the Federal Bureau of Investigation (FBI), the New York City Business Integrity Commission, and the New Jersey Bureau of Securities are all investigating GPB Capital and its various funds. Additionally, Massachusetts Secretary of the Commonwealth William Galvin is investigating more than 60 brokerage firms whose brokers sold GPB private placements to investors. The “temporary” cessation of distributions to investors, since late last year, the firm’s failure over the last two years to provide financial statements, and its auditor’s resignation without completing its audit last year have only served to raise questions and increase concerns.

Investors who lost money after investing in Aequitas Management LLC, which is accused of running a $350M Ponzi scam, have arrived at a $234M settlement in their fraud case against EisnerAmp LLP, Deloitte & Touche LLP, TD Ameritrade, Duff & Phelps, Sidley Austin LLP, Integrity Bank and Trust of Colorado, and Tonkon Torp. The defendants are accused of playing a part in the plaintiff’s losses because of their purported involvement in the sale of Aequitas securities.

More than 1,500 investors collectively invested over $350M in Aequitas securities while thinking that they were backing trade receivables in healthcare, education, transportation, and other areas. This investor fraud case, Ciuffitelli et al v. Deloitte & Touche LLP et al, was brought as a proposed class action and filed over three years ago by claimants in Oregon and California.

Based on a complaint brought also in 2016 by the US Securities and Exchange Commission (SEC), Aequitas is accused of misleading investors about the extent their money became involved in for-profit education company Corinthian Colleges, which filed for bankruptcy in 2015. The regulator accused Aequitas of becoming a Ponzi scam after Corinthian failed, with the company continuing to sell securities for the purposes of paying back earlier investors and to support its executives’ expensive lifestyles.

The US Securities and Exchange Commission (SEC) is accusing Paul Andrews Rinfret, Plandome LLC, and Plandome Partners LP of defrauding investors in a securities offering scam. At least five investors were allegedly collectively bilked of $19.3M. Rinfret, who is a former New York trader, is now also facing parallel criminal charges.

The SEC, in its complaint, contends that Rinfret told investors they were backing an already successful trading strategy using a proprietary algorithm that had rendered returns in the triple digits—360% in a multiyear period, supposedly—when, in reality, money was being lost on a consistent basis. Meantime, Rinfret allegedly used investors’ money to fund his extravagant lifestyle.

The investors are five individuals who thought they were buying limited partnership interests in Plandome Partners, LP, which Rinfret claimed was an investment fund that he and Plandome Partners LLC ran. These investors thought their funds would be traded in S & P futures contracts and foreign currency.

Investment News is reporting that broker-dealers and their brokers that sold GPB Capital Holdings private placements to investors have collectively been paid $167 million in commissions. That large number represents 9.3% of the $1.8 billion that supposedly accredited, wealthy investors paid for these risky private placements. Recent reports had estimated that the commissions paid were lower, at around $100 million (about 7% per transaction), but GPB Capital has apparently confirmed the much larger number.

While brokers and broker-dealers are allowed to make up to a 10% commissions for selling financial products to clients, very few investments pay such a high rate. However, private placements, such as GPB Capital, entice brokers and their firms to sell such risky investments by offering much higher commissions and fees.

For private placements, it is not uncommon for financial representatives to earn around 7% in commissions, with another 2% going to the brokerage firm. In comparison, mutual funds and other similar investments typically pay less than half as much in commissions.

A Financial Industry Regulatory Authority (FINRA) arbitration panel has awarded 23 investors $3M in their claim against Spire Securities, its CEO David Lloyd Blisk, and CCO Suzanne Marie McKeown. The broker-dealer and its executives were accused of inadequately supervising former broker Patrick Evans Churchville, whom the investors contend fraudulently sold them investments that caused them to lose money in a $21M Ponzi scam.

Churchville sold the investments through ClearPath Wealth Management, a registered investment adviser that he operated outside of Spire Securities. Still, the claimants contended that the broker-dealer should have prevented Churchville from causing them financial harm while he was a Spire Securities broker and could have done so had they properly overseen him.

Churchville pleaded guilty in 2016 to criminal charges accusing him of operating a $21M Ponzi scam. In 2017, he was sentenced to seven years in prison for tax evasion and wire fraud.

Unregistered investment advisers (IAs) David Wagner and Mark Lawrence, Downing Investment Partners, Downing Partners, and Downing Digital Healthcare Group are now facing US Securities and Exchange Commission (SEC) charges accusing them of involvement in an $8M scam that allegedly defrauded dozens of healthcare fund investors. Wagner and Downing are also facing parallel criminal charges.

The regulator contends that between 5/2014 and 1/2017, Wagner, Lawrence, and the companies they headed sold healthcare services and technology-related investment opportunities while defrauding 30 investors, many of them “purported” employees at two of the defendant companies, as well as at Downing Health Technologies, Inc., and Cliniflow Technologies. According to the SEC’s complaint, the two unregistered investment advisers and their companies claimed to acquire, oversee, and resell companies that offered technologies and services for the investment portfolios of the healthcare funds at issue.

To bring in new investors, the two unregistered IA’s allegedly would inflate how much was available in cash reserves at the funds, including at Downing Digital Healthcare Group and Downing Investment Partners, as well as the revenue from the portfolio companies of the funds. Wagner is also accused of secretly negotiating a deal that obligated Downing Digital Healthcare Group to pay him and an entity that he operated certain management fees. This allegedly resulted in the defendants misusing at least $540K of the $1.5M that was invested in Downing Digital Healthcare Group to go toward these fees.

The US Securities and Exchange Commission (SEC) is accusing a recent college graduate of running a Ponzi fraud that targeted young investors, including college students and other recent graduates. The regulator announced its emergency action against Syed Arham Arbab, Artis Proficio Capital Management, LLC, and Artis Proficio Capital Investments, LLC this week. It wants an asset freeze, emergency relief, civil penalties, and the repayment of allegedly ill-gotten earnings along with prejudgment interest.

At least eight college students, recent college graduates, or their relatives invested over $269K in the alleged hedge fund fraud. According to the regulator’s complaint, Arbab ran his scam out of a fraternity house close to the University of Georgia campus. He is a recent alumni and is accused of using his college connections to perpetuate his alleged scam.

According to the SEC’s complaint, Arbab sold investments in Artis Proficio Capital, a supposed hedge fund, that he touted as making up to 56% returns the year before, and he supposedly guaranteed up to $15K of investor money. Investors who purchased bond agreements were told that their money would be returned with a fixed return rate.


Investment Advisor Allegedly Overcharged Clients $367K in Advisory Fees

The US Securities and Exchange Commission (SEC) has filed investor fraud charges against investment adviser Stephen Brandon Anderson, accusing him of defrauding clients and overcharging them at least $367K in advisory fees. Anderson ran River Source Wealth Management, LLC. The formerly registered investment advisory firm (RIA) is no longer in operation.

However, while in business, said the SEC, the RIA’s main income source was customer advisory fees. The fees were determined according to the assets under management of each customer.

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