The Financial Industry Regulatory Authority (FINRA) has barred yet another ex-broker for selling promissory notes that have since been linked to the $1.2B Woodbridge Ponzi scam. The fraud is believed to have bilked around 8,400 investors.
According to the self-regulatory authority (SRO), broker Frank Dietrich sold 58 investors $10M of promissory notes that came from the Woodbridge Group of Companies. 30 of these investors were clients of Quest Capital Strategies, Inc., which was Dietrich’s brokerage firm at the time of the sales. FINRA said that the former Quest Capital broker earned $261K in commissions from selling the Woodbridge investments.
Quest Capital Strategies reportedly did not know that Dietrich was selling the Woodbridge notes to its customers. Earlier this year, the brokerage firm allowed him to step down after finding that he had sold a product it had not approved and for failing to disclose external business activities.
According to Dietrich’s BrokerCheck record, he is named in seven disclosures, most of them involving customer claims seeking damages after he sold them Woodbridge promissory notes. The former broker was previously registered with:
· Wunderlich Securities
· Capital Securities of America
· The Leaders Group
· PFS Investments
Dietrich is not registered with any brokerage firm at this time.
FINRA Bars Other Brokers Over Woodbridge Investment Sales
He is not the only broker to recently be barred by FINRA after they sold Woodbridge investments. In October, the SRO barred then-Signator Investors broker Dennis Ferwerda after the SRO asked him to provide information and documents involving his sale of Woodbridge notes to customers, as well as separate documents and information related to investments involving 1 Global Capital, and he did not comply. US prosecutors and the Securities and Exchange Commission (SEC) are investigating 1 Global Capital, a small business lender, over an alleged $283M loan fraud. A 40-year veteran of the brokerage industry, Ferwerda was fired by Signator Investors earlier this year after purportedly selling investments that the firm had not approved.
In September, FINRA barred ex-HD Vest Investment Services brokers Donna Lynn Barnard and Jerry Davis Raines, also after both failed to provide the SRO with the information and documents it had requested related to their sale of Woodbridge promissory notes to customers. The broker-dealer fired them last year and former customers have filed broker fraud arbitration cases against them related to their Woodbridge investments.
Woodbridge Ponzi Scam
Woodbridge filed for bankruptcy protection last year. A few weeks ago, ex-Woodbridge CEO Robert Shapiro agreed to personally pay $120M to the SEC to resolve allegations that he defrauded investors in the $1.2B Ponzi scam. That payment is part of the $892M that he, his wife, and a number of entities they control have been ordered to pay over the fraud.
Shapiro had promised investors of luxury spec homes returns of up to 10%. Instead, he allegedly used $21M of their money to fund his lavish lifestyle, including private jets and country club expenses, as well as directed other investor funds into the entities that he ran. Shapiro settled the civil charges without denying or admitting to the regulator’s findings.
Woodbridge Broker Fraud Lawyers
If you are an investor who lost money in the Woodbridge Ponzi scam after a broker or brokerage firm sold you Woodbridge promissory notes, please contact our broker fraud lawyers at Shepherd Smith Edwards and Kantas, LTD LLP (SSEK Law Firm) today. Unfortunately, Woodbridge investments also were sold by unlicensed salespersons. Our investor fraud lawyers can help you explore your legal options.
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