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Accused of Defrauding Plant Workers, Including Retirees

Centaurus Financial advisor Ricky Mantei (Mantei Group), formerly a JP Turner stockbroker, is alleged to have been the mastermind behind a large enterprise that spanned four offices in two states and resulted in the retirement savings of many unsuspecting investors being lost.  

Mantei is now named in 35 customer disputes. The majority, 30 of these broker fraud complaints, were filed over the last two years and many of them are still pending. Most of the complaints filed in the last two years accuse Mantei of heading up a one size fits all investment fraud that overconcentrated customers’ accounts in structured products and other risky, illiquid, and speculative investments. Many of his alleged victims were retirees, including plant workers in South Carolina and Tennessee.

LPL Blocks Sales of Nontraded Real Estate Investment Trusts and Publicly Traded Property Interval Funds 

This week, LPL Financial (LPLA) announced that it had suspended its sales of several nontraded REITs, as well as a number of publicly traded property interval funds. This is because the novel coronavirus (COVID-19) was placing these investments at a higher risk of losses. 

In an email to InvestmentNews, LPL EVP of Products and Platforms, Rob Pettman, wouldn’t offer the names of the funds but did note that the broker-dealer hoped to offer them to investors again once the markets had calmed.

Broker Fraud Along With The Coronavirus May Be Causing Investment Losses 

Becoming the victim of securities fraud is a serious matter. With stocks plummeting and the markets fluctuating all over the place in the wake of COVID-19, investors may not realize that it’s not just the economic reverberations of the coronavirus that’s plaguing their portfolio. 

They also may be losing money because their stockbrokers or investment advisor were fraudulent or negligent when handling their investments and placed them in an even more precarious financial situation with more losses than they would now be sustaining otherwise. 

In a recent award, a Financial Industry Regulatory Authority (FINRA) arbitration panel has decided that Merrill Lynch must pay a former professional baseball player and his wife $1.7 million in compensatory damages, plus $88,758 in costs, for losses they sustained from investing in Puerto Rico bonds and closed-end bond funds. The retired MLB player is Angel Pagan and his wife is Windy Pagan, a former Ms. Puerto Rico. Angel was an outfielder for the NY Mets, the Chicago Cubs, and the San Francisco Giants before retiring to live on the island.

The couple invested $3.3M in the Puerto Rico bonds at the recommendation of their Merrill Lynch broker, Alex Jose Gierbolini (Gierbolini), who previously worked at UBS Financial Services of Puerto Rico (UBS). UBS has been the subject of thousands of investor claims for losses sustained when the Puerto Rico bonds and closed-end bond funds plunged in value beginning in 2013. It was while Gierbolini was a UBS financial representative that he sold to the Pagans the majority of their bonds.

Gierbolini continued to work with the couple when he moved to Merrill Lynch in 2012. They contend that Merrill Lynch and Gierbolini disregarded red flags indicating that the Puerto Rico bonds were headed downward. This left the Pagans’ portfolio overexposed.

The US Securities and Exchange Commission (SEC) has secured an asset freeze against three people and entities accused of operating a $125M offering fraud. The regulator contends that the international trading program, run by Mediatrix Capital, Inc. and its principals Michael Stewart, Michael Young, and Bryant Sewall, touted an algorithmic trading strategy that was supposedly “highly profitable,” had never experienced a month when it didn’t make money, and rendered over 1600% of returns.

The SEC contends that the reality was a very different story, with the trading strategy regularly losing money–over $18M from trading just in 2018. The Commission is accusing the defendants of the following:

    • Misrepresentations involving the trading strategy’s ability to make money

Secretary of the Commonwealth of Massachusetts William Galvin has imposed a $1.1M fine on target=”_blank” rel=”noopener noreferrer”>LPL Financial (LPLA) after finding that the brokerage firm did not properly register 651 of its advisors in the state. Galvin’s office contends that for six years, LPL let these brokers work in Massachusetts despite the lack of registration and that this violates the state’s securities laws.

In Massachusetts, a brokerage firm is required to register its agents before they are allowed to engage in securities-related business in the state. As of May 9, LPL had 4,219 agents who were registered in the state.

However, the lack of registration by 651 of its agents between March 2013 and April 4, 2019 prevented Massachusetts securities regulators from being able to check their qualifications and histories to ensure that investors who worked with them were in safe hands. 441 of these unregistered agents acted as financial advisors to at least one or more state residents during the period at issue. The other 210 agents supervised the agents who were advisors to these customers.

Michael L. Cohen, the ex-head of Och-Ziff Capital Management Group in Europe, has pleaded guilty to one criminal count of lying to authorities. The guilty plea comes a year after he was accused of defrauding a client, a biomedical research charity, of millions of dollars. Although prosecutors have not identified the charity, sources have told various media that it was Wellcome Trust, which backs research in health, science, and other fields.

Cohen, who was based in the UK at the time while working for the hedge fund management firm, is the one who brokered the sale of shares in an African mining company to the charity. The company belonged to one of his business associates.

Cohen made $4M from the sale of the shares. He allegedly failed to tell the charity that he himself owned shares in the mining company.

Gonzalo Ortiz, an investment adviser, is facing charges accusing him of defrauding one investor of more than $570K. According to the Securities and Exchange Commission (SEC), Ortiz appropriated about $224,500 of his client’s funds and lost about $290K through trades that he made.

In its complaint, the SEC said from 2015 to 2017, Ortiz persuaded an acquaintance to give him control of nearly $570K, much of which were retirement funds. The investment adviser allegedly did this by promising the investor a 50% yearly return and while falsely touting a successful track record in investing.

At first, said the Commission, the investor gave Ortiz $200K to invest. Although the investment adviser was not authorized to use the money for his own use, he allegedly spent about $56K on cars and other goods while losing the remainder of the funds through trading. Ortiz then gave the investor a bogus account statement showing an over 50% return on the investment, compelling his client to give him another $200K to invest.

$20M Ponzi Scam Results in Guilty Plea for Kiddar Capital Founder

Todd Hitt, Kiddar Capital’s founder and a member of a prominent commercial real estate family in Virginia, has pleaded guilty to criminal fraud charges accusing him of operating a $20M Ponzi fraud that involved several schemes. According to prosecutors, Hitt solicited about $30M from investors and then proceeded to use most of the money to fund his lavish lifestyle while using newer investors’ funds to pay older investors. He also allegedly made “false statements and material omissions” to investors when he didn’t tell them that their money was comingled with unrelated projects and not just the real estate and venture capital investments for which their funds were supposedly designated.

The U.S. Attorney’s Office for the Eastern District of Virginia contends that because of Hitt’s “fraudulent conduct,” investors lost about $20M. He is facing up to 20 years behind bars and is expected to pay a fine of millions of dollars. He previously settled related civil fraud charges filed against him by the US Securities and Exchange Commission.

Former Centaurus Financial Broker’s Certified Financial Planner Designation is Suspended

The Certified Financial Planner Board of Standards has suspended Texas broker’s Larry J. Templin’s CFP designation. The interim suspension comes after Templin, who is accused of bank fraud, refused to provide the Financial Industry Regulatory Authority (Finra) with information related to the allegations against him.

Templin was a Centaurus Financial broker until last year when he was fired by the Texas-based brokerage firm. Previously, he was registered with USAllianz Securities and First Global Capital, which are both headquartered in Texas. Templin worked in the securities industry for over 20 years.

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