Former Michigan Financial Adviser Faces SEC Charges in $2.7M Investment Scam that Defrauded Seniors
The US Securities and Exchange Commission has filed fraud charges against Ernest J. Romer III, a former Michigan-based financial adviser with 47 disclosures on his Broker-Check record and who was barred by FINRA last year. Romer also pleaded no contest to embezzlement in July and is awaiting his sentence. According to the regulator, between 2014 and 2016, the ex-financial adviser defrauded unsophisticated investors and older retirees of $2.7M.
The regulator contends that Romer convinced at least 30 clients to “sell securities in their brokerage accounts” and transfer their proceeds to the companies CoreCap Solutions or P & R Capital. He purportedly gave them the impression that these were affiliated brokerage firms when, in fact, they were businesses that Romer owned. Many of these investors entrusted him with their life savings.
Clients were purportedly promised better returns and told that their money would be invested in the stock market. Instead, Romer allegedly used the funds to make his own trades, pay back customers who lost money when they invested at his previous broker-dealer, issue Ponzi-like payments to investors, and to spend on himself and his family.
Now, the regulator is seeking disgorgement of ill-gotten gains, prejudgment interest, and civil penalties for the investment fraud charges.
The disclosures on Romer’s BrokerCheck record include several criminal events, over 20 customer complaints, and two financial events. He previously worked with Comerica Securities, L M Kohn & Company, Leonard & Company, Natcity Investments, Inc., First of America Brokerage Service, Independence One Brokerage, and two other firms. Romer worked in the securities industry for more than two decades.
$345M Ponzi Scam Allegedly Defrauded Over 230 Investors
The SEC was able to get an emergency asset freeze to stop a Ponzi-like scam that allegedly defrauded more than 230 investors of over $345M. Meantime, prosecutors in Maryland have filed parallel criminal charges against the three men accused of running the scheme.
Of the $345M raised from investors, more than $90M came from individual investors. Nearly $203M was from feeder funds and about $52M cam from family offices. The feeder fund investors included small business owners, retirees, professionals, pro athletes, and financial advisors.
According to the SEC’s complaint, J. B. Ledford, Kevin B. Merrill, and Cameron Jezierski promised prospective investors hefty profits through the buying and reselling of consumer debt portfolios. They allegedly used false documents, lied, forged signatures to run their alleged scheme, and spoke about their “purported” expertise in collecting on consumer debt and then reselling the debt.
Investors’ money was instead allegedly used to make about $197M in Ponzi-like payments to other investors. The Commission is also accusing Ledford and Merrill of using at least $85M of investor funds on their own expensive lifestyles, including $10.2M on at least two luxury cars, nearly $500K on two pieces of jewelry, and millions of dollars on homes, other luxury expenses and memberships, and other costs.
Also facing SEC charges are Jezierski, Merrill, and Ledford’s numerous entities, including:
Delmarva Capital, LLC
LLC Rhino Capital Group, LLC
Global Credit Recovery, LLC
Riverwalk Financial Corporation
Rhino Capital Holdings,
DeVille Asset Management LTD
The SEC wants disgorgement, prejudgment interest, and financial penalties.
Our investor fraud lawyers represent investors, including retail investors, retirees, small business owners, and institutional investors that have sustained losses. Shepherd Smith Shepherd and Kantas LLP works with investors throughout the US. Contact our investor law firm today.
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1 Global Capital Accused of Defrauding Retail Investors in Alleged $287M Unregistered Securities Scam, September 4, 2018