Investors Sue Goldstone Financial Group Over 1 Global Capital Sales
Investors have filed a proposed class action securities fraud case against Goldstone Financial Group LLC, their principals Anthony Pellegrino and Michael Pellegrino, and their defunct Pell Corp. Brothers Inc. The plaintiffs contend that the financial services firm sold illegal securities in payday lender 1 Global Capital, which is now accused of running a $287M investor fraud.
According to the investor fraud complaint, Goldstone, which is based in Illinois, promoted “short term high earnings “ stakes in 1 Global loans through dinner seminars at fancy restaurants, as well as infomercials that aired in the Chicago area. The broker-dealer is accused of raising millions of dollars as a result of its efforts though the sale of interests in 1 Global’s loans that were issued to businesses unable to obtain traditional financing and in merchant cash advances.
Since 2014, 1 Global allegedly has fraudulently raised $287M throughout the US. Investors were allegedly promised that they stood to make money from these supposedly low risk investments.
In August, the US Securities and Exchange Commission filed fraud charges against the company while accusing its CEO Carl Ruderman of diverting at least $28M in investor funds to pay for his lavish lifestyle and unrelated business costs. Thousands of investors have purportedly been defrauded.
Meantime, 1 Global paid some $9M in broker fraud commissions, including to barred brokers and unregistered investment advisers and others that sold the securities, which were unregistered. 1 Global filed for bankruptcy protection this summer.
The plaintiffs of this proposed class action want all of their money back with interest and other damages.
DOJ Arrests Foreign National Over Alleged $164M International Market Rigging Fraud
The US Justice Department have arrested and charged Roger Knox, a UK resident, with securities fraud and conspiracy to commit securities fraud. Knox is one of a number of people accused of running a fake Swiss asset management firm called Wintercap SA and previously known as Silverton SA. The firm purportedly ran multiple international market rigging scams, generating almost $165M since June 2015.
Knox and his co-conspirators are accused of selling “massive quantities” of microcap securities in at least 50 microcap companies for control groups that secretly owned the stock. Knox allegedly ran marketing campaigns to artificially raise the price and trading volume of the securities, sending the proceeds to his co-conspirators.
Meantime, the US Securities and Exchange Commission has filed a parallel civil case against Knox, Wintercap, and Michael T. Gastauer. The regulator, which filed an emergency order this week, has been able to obtain an asset freeze.
The SEC contends that Knox and Wintercap assisted microcap securities holders to get around federal securities laws that limit sales by big shareholders and gave them “anonymous access’ to brokerage accounts so they could sell the shares in the US. Gastauer, meantime, is accused of aiding and abetting the microcap fraud.
Cornerstone Capital Founder Gets Six Years for $3M Investor Fraud
Melvin Leonard Wimmer, a South Carolina-based investment adviser and the founder of Cornerstone Capital, is sentenced to six years in prison. Wimmer, who pleaded guilty to securities fraud, lost about $3m in investors’ money. Many of the investors were older investors who lost their retirement money as a result of the scam.
From 2010 and 2017, Wimmer was able to raise over $3.6M from 25 investors for trading in options, futures, and securities. However, contend prosecutors, Wimmer did not tell investors that much of the funds would be pooled for high-risk trading in futures and securities contracts. Even as the trading sustained losses, he continued to send investors fraudulent account statements showing 8-10% in yearly gains.
In addition to his prison sentence, Wimmer must pay $3M in restitution for the investment adviser fraud.
Our investment fraud law firm works with all kinds of investors in helping them to recoup their money. Please contact Shepherd Smith Edwards and Kantas, LLP to request your free, no obligation, case consultation.
Investors Hit Broker With Class Action Over 1 Global Sales, Law360, October 2, 2018
Founder of Swiss Brokerage Firm Charged in Global Securities Fraud Scheme, Justice.gov, October 3, 2018
Greenwood Investment Advisor Sentenced to Prison, Justice.gov, October 3, 2018