Articles Posted in Senior Investors

William Neil Gallagher, a Dallas area-based radio host based who calls himself the “Money Doctor,” is now facing securities fraud charges accusing him and his companies, Gallagher Financial Group and W. Neil Gallagher, PhD Agency, Inc., of seeking to defraud older investors of their retirement money in a $19.6M Texas-based Ponzi scam/affinity fraud. The US Securities and Exchange Commission (SEC) brought the civil fraud charges against them.

According to the SEC’s complaint, from 12/2014 through 1/2019, Gallagher, who is based in the Dallas/Fort Worth area, raised at least $19.6M (maybe even up to more than $29M) from about 60 elderly investors ranging in age from about 60 to the early 90’s. He allegedly did this through his companies in what the regulator is referring to as an “affinity fraud investment scam” that is also a Ponzi scheme.

Gallagher is accused of using his radio shows to target retired Christian investors, who were his radio audience, and to whom he ingratiated himself by often making religious references on his shows. He also allegedly urged radio listeners to call GFC to set up meetings, during which he would help them with their retirement plans and give them advice regarding how to make money without having to take on any risks.

Just a few weeks after former Wells Fargo (WFC) broker John Gregory Schmidt consented to a final judgment in the US Securities and Exchange Commission’s (SEC) investor fraud case against him, the regulator announced that it has barred Schmidt for misappropriating more than $1.3M from clients, most of them elderly retired investors. Schmidt, who also ran Schmitt Investment Strategies Group in Ohio and was already barred by the Financial Industry Regulatory Authority (Finra), was fired by Wells Fargo in 2017. In a parallel criminal case, he is also charged with 128 felony counts over the same fraud allegations.

The SEC’s complaint notes that at the time that Wells Fargo fired Schmidt, he had about 325 retail brokerage customers. At least half of them had worked with him for over a decade, and a “significant percentage” were retirees who depended on regular withdrawals from their brokerage accounts to cover their living expenses. Many of them were unsophisticated, inexperienced investors, some of whom were suffering from dementia, including Alzheimer’s disease.

Schmidt’s scam purportedly involved making unauthorized sales and withdrawals involving variable annuities from certain customers’ accounts and then using fraudulent authorization letters to move the money to the other clients’ accounts. According to the Commission’s complaint, between ’03 and ’17, Schmidt took money out of seven clients’ accounts and moved the funds to the accounts of other clients to conceal shortfalls there.

Investors Alleging Negligence and Mishandling of Their Retirement Funds Win FINRA Case

A Financial Industry Regulatory Authority (FINRA) panel arbitration is ordering First Allied Securities and financial adviser Larry Glenn Boggs to pay claimants and early retirees Nita and Mike Snow over $578K in compensatory damages, $500,000 in punitive damages, $350K in attorney’s fees, and $60K in other costs related to losses they sustained. Boggs had worked with the Snows on their early retirement plan, which included investing in the Sun America Life-issued variable annuity the Polaris Advantage II and other investments.

In their securities arbitration claim, the Snows sought compensation from Boggs, First Allied Securities, First Allied Advisory Securities, and American Retirement Solutions of Louisiana, LLC. All of them denied wrongdoing.

John G. Schmidt, an ex-Wells Fargo (WFC) broker, is now facing 128 felony counts over his alleged running of a $1M Ponzi scam. Criminal charges include:

  • 124 counts of forgery
  • 1 count of telecommunications fraud

The Financial Industry Regulatory Authority (FINRA) announced that it is suing Ami Forte, a former star Morgan Stanley (MS) broker. Forte is accused of making unsuitable trades in the account of Home Shopping Network co-founder Roy M. Speer, who was mentally impaired and bedridden at the end of his life.

Forte earned over $9M commissions in less than a year from her work with Speer alone, and overall his accounts were responsible for nearly 90% of the commissions she made. At one point she was considered one of the highest earning female financial advisers in the US.

While the FINRA fraud complaint only refers to the older investor by his initials, news sources and other court documents identify the elder financial fraud victim as Mr. Speer. The Home Shopping Network co-founder, who was 80 when he died in 2012, had an estimated worth of about $775M in 2003. For a time, he was romantically involved with Forte.

Steven Pagartanis, an ex-New York broker with Lombard Securities, has pleaded guilty to wire fraud and mail fraud in a Ponzi scam that went on for more than 18 years and caused investors to lose more than $9M of the over $13M that they invested. Many of his victims were older investors who lost a significant amount of their life savings. Many of them had worked with Pagartanis for years.

According to the release by the US Attorney’s Office for the Eastern District of New York, from 1/2000 to 3/2018, Pagartanis persuaded older individuals to get involved in investments involving real estate, including those that had affiliations with an international hotel conglomerate and publicly traded entities. Investors were told that their principal was secure and they would make a fixed return of 4.5 to 8% yearly.

Pagartanis’ victims were instructed to write checks to an entity of which he was secretly in control. The former broker used different bank accounts to launder the stolen money that he then spent on his own expenses as well as to pay other investors their “interest or dividend payments” that they were owed. He set up bogus account statements so as to encourage further investing and to hide his fraud.

Center Street Securities broker Sean Kelly is accused of defrauding 12 investors, including older retirees and individuals with disabilities of at least $1M through his companies Lion’s Share and Associates, Inc., Lion’s Share Financial of East Cobb, and Lionsshare Tax Services, LLC. The Georgia-based broker is now facing criminal investor fraud charges, as well as parallel civil charges brought by the US Securities and Exchange Commission.

Kelly is a registered broker with Center Street Securities Inc. The SEC contends that Kelly falsely represented himself as both an investment adviser and a broker-dealer. According to his BrokerCheck record, he previously worked with several other firms, including Capital Financial Services and Securities America, and he has worked in the industry for at least 17 years.

The SEC contends that Kelly told investors he would put their money in different kinds of investment products, including real estate funds, annuities, private placements, and investment funds. Instead, he allegedly used investors’ money on his own expenses, including to pay for luxury holidays, Super Bowl tickets, mortgage payments, and to make cash withdrawals. Kelly is accused of telling investors to issue checks to Lion’s Share or a third party instead of to Center Street Securities.


Former Financial Adviser Now Facing Years in Prison for $20M Investor Fraud

Dawn Bennett, an ex-financial adviser and the operator of Bennett Financial Group Services, has been convicted of 17 criminal charges, including securities fraud, conspiracy, bank fraud, wire fraud, and making false statements on a loan application. It took a federal jury less than five hours to convict her for  a $20M ponzi scam that defrauded nearly four dozen investors, including many older investors and retirees. Some of her advisory clients took money out of their retirement accounts to invest with Bennett.

Prosecutors contend that the former financial adviser, who is also an ex-radio show host, used investors’ money to pay back earlier investors in Ponzi-like fashion and to fund her luxury lifestyle. This purportedly included paying priests in India to conduct religious ceremonies to keep regulators away, a $500K luxury suite at the Dallas Cowboys’ stadium, and cosmetic surgery procedures.

Wayde McKelvy, who is accused of playing a key role in a $54M Ponzi scam that targeted unsophisticated investors, is on trial before a federal jury. According to the US government, McKelvy, who is a former co-owner of Mantria Corp., and two others allegedly sold fake investments in green energy and land to investors, including retirees and widows, and then used the funds to support their luxury lifestyles.

Investors were promised up to 50% returns on a supposed new charcoal substitute comprised of organic waste, as well as on real estate in Tennessee. The land, however, was never developed.

Meantime, investors were told that the Tennessee land was valued at over $100M. Through Mantria Financial, the alleged co-conspirators assisted investors in purchasing investments in both the land deals and the charcoal substitute, known as “biochar.”


Steele Financial is Accused of Investor Fraud

The US Securities and Exchange Commission has filed civil charges against investment advisory firm Steele Financial Inc. and its owner Tamara Steele. According to the regulator, they allegedly sold $13M of risky securities to over 120 advisory clients. A lot of these clients are teachers, ex-teachers, or other public education employees. The SEC contends that Steele and her investment advisory firm did not tell them that Steele Financial would be making up to 18% in commissions in sales.

According to the Commission’s investment advisory fraud complaint, from 12/2012 to 10/2016, Stele Financial and Steele sold over $15M of Behavioral Recognition Systems Inc. securities. BRS is a company that the SEC has charged with fraud in the past. Meantime, Stele and her firm made over $2.5M of commissions.

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