Investor Lawyers Blog

Investor Fraud: Man Who Solicited Women He Dated is Convicted, Real Estate Developer is Accused in $16M Financial Scam Turns Himself In, and Couple Allegedly Promised Over 2200% in Investment Returns

Published on: October 12, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Man is Convicted in $2.2M Investment Fraud

A federal jury has convicted a Pennsylvania man on 16 counts of securities fraud, 12 counts of wire fraud, four counts of money laundering, one count of mail fraud, and one count of tax evasion in a $2.2M investment scam. Thomas H. Connerton is accused of defrauding 50 people, including several women that he met through online dating. He was the CEO, president, and founder of Safety Technologies, LLC.

Founded in 2006, Safety Technologies was supposed to develop and commercialize materials that were resistant to cuts and punctures and which could be used to make surgical gloves and related products. Starting in 2009, Connerton began persuading investors to buy securities in Safety Tech. The investments were not registered with the US Securities and Exchange Commission.

FINRA Bars Former Morgan Stanley and Wells Fargo Brokers

Published on: October 11, 2018 | by Shepherd Smith Edwards & Kantas, LLP

The Financial Industry Regulatory Authority announced this week that it is barring three former brokers. They are ex-Morgan Stanley broker (MS) Kevin Smith and former Wells Fargo (WFC) brokers Wilfred Rodriquez Jr. and Thomas A. Davis.

According to the self-regulatory authority’s order, the bar against Smith comes after he wouldn’t appear before FINRA to testify regarding allegations involving a structured products trade in a family member’s trust that he may have executed without checking with the client first.

Morgan Stanley fired Smith in 2016 in the wake of the broker fraud allegations.

Financial Fraud: Massachusetts Mayor is Accused of Bilking Investors, Former Wells Fargo Broker Allegedly Stole $1M From Older Clients, and the LendingClub Asset Management Settles $4.27M Securities Case

Published on: October 11, 2018 | by Shepherd Smith Edwards & Kantas, LLP

26-Year Old Mayor is Arrested and Accused of Investor Fraud

Jasiel Correira, who is the mayor of Fall River, Massachusetts, has pleaded not guilty to multiple criminal counts of wire fraud and tax fraud. The 26-year-old was arrested this week following allegations that he defrauded investors of over $230K.

Correira maintains that the investor fraud allegations are false. He refuses to step down as city mayor.

Wayde McKelvy, Accused of Defrauding Retirees and Widows in $54M Ponzi Scam, is Now on Trial

Published on: October 8, 2018 | by Shepherd Smith Edwards & Kantas, LLP

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.”

Real Estate Investment Trust Cases: SII to Repay Clients Who Bought Non-traded REITs, Trustmont Financial Group is Ordered to Pay Client $1M, and Vereit Settles with More Investors Over Accounting Fraud Claims Against ARCP

Published on: October 3, 2018 | by Shepherd Smith Edwards & Kantas, LLP

SII Investments to Pay Back Clients Over Nontraded REITs

Massachusetts Secretary of the Commonwealth William Galvin is ordering SII Investments Inc. to repay clients who purchased non-traded real estate investment trusts through the independent brokerage firm. According to Galvin’s office, SII did not properly supervise these transactions.

It was last year that the Massachusetts regulator filed charges against SII, accusing the financial firm of failure to supervise and “dishonest or unethical conduct” related to non-traded REIT sales made to state residents. Galvin accused the broker-dealer of inflating the liquid net worth of clients by counting their annuities as liquid assets rather than non-liquid ones.

SEC and CFTC File Multiple Binary Options Fraud Complaints Accusing Marketers of Defrauding Investors of Millions of Dollars

Published on: October 1, 2018 | by Shepherd Smith Edwards & Kantas, LLP

In multiple federal civil complaints alleging binary options fraud, the US Securities and Exchange Commission is accusing a number of marketers of defrauding at least 75,000 investors—including retired investors and other retail investors, through the use videos that made false promises that they could make money fast. Investors were allegedly bilked of tens of millions of dollars.

The regulator is charging All In Publishing, LLC, Berry Media Works, LLC, and 10 individuals. The regulator SEC that the marketers sought to “trick” their targets into setting up brokerage accounts and trading in binary options, which are high risk securities.

The marketing campaigns promised investors they would make a lot of money if they set up the binary options account via “free or secret software systems” and then traded in these securities. Meantime, every time an investor set up and put money in a brokerage account, the marketers made money.

Securities News: Citigroup to Pay $12M Over Alleged Dark Pool Misrepresentations, SEC Issues Nearly $4M Whistleblower Award, Ex-Bankrate CEO Who Pleaded Guilty to Fraud Gets 10 Years in Prison

Published on: September 28, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Citigroup Must Pay Over $12M Over Dark Pool Allegations

To settle Securities and Exchange Commission that it misled users of a dark pool run by an affiliate, Citigroup Global Markets Inc. (CGMI) and the affiliate, Citi Order Routing and Execution (CORE), will pay $12M. The regulator contends that Citigroup (C) misled users when it told them that high-frequency traders were prohibited from trading in Citi Match, despite the fact that two of the dark pool’s most active users qualified as high-frequency traders. These traders had executed over $9B in orders.

Dark pools are private securities exchange that allows investors, usually big financial institutions, to make anonymous trades. Members of the investing public cannot trade in dark pools. High-frequency trading typically involves the use of supercomputers, usually by financial firms, to make trades within microseconds.

Texas Investor Fraud: Investment Adviser is Barred in $6.8M Offering Fraud and Investment Promoter Gets 25 Years in Prison for Stealing from Clients

Published on: September 27, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Thomas J. Caufield, an investment advisor and the owner of and a Dallas-based investment education franchise, is now barred by the Securities and Exchange Commission. The regulator recently charged Caufield with investor fraud, accusing him of lying to over 30 investors in a $6.8M offering fraud.

According to the SEC, from at least early 2013 through December 2017, Caufield, who is from Colleyville, Texas, promised investors substantial returns if they invested in the high-yield promissory notes for what he touted was a profitable franchise. The investment advisor claimed that their money would go toward acquiring and running a franchise that would provide education programs. Instead, Caufield allegedly used a substantial portion of the over $6M in investor funds pay back earlier investors and take care of overdue franchise fees.

The Texas investment advisor is accused of providing materials with false information and making false pitches to prospective investors, including the franchise’s students and clients of DAT Capital Advisors, which was the investment adviser that Caufield owned and used to be registered in the state. Caufield allegedly did not disclose that the franchise was in poor financial health.

TD Ameritrade Fined $500K For Not Reporting Investment Advisers’ Suspect Activities

Published on: September 26, 2018 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission is ordering TD Ameritrade Inc. (AMTD) to pay a $500K fine for not submitting mandatory suspicious activity reports (SARs) even after the broker-dealer stopped doing business with 111 independent investment advisers. The regulator contends that between 2013 and September 2015, the firm ended its business relationships with these advisers, who were not TD Ameritrade employees, due to what it found to be “unacceptable business, credit, operational, reputational or regulatory risk” to itself or customers.

While the brokerage firm did submit a number of suspicious activity reports (SARs) regarding suspect transactions made by some of these advisers it had fired, it did not submit SARs reports on some of the other advisers with whom TD Ameritrade had also ended their business relationships.

The suspect activities at issue allegedly included suspicious trading—including moving losses from trade errors to clients—inappropriate money transfers, and making false and misleading statements to customers while serving as an investment adviser managing their TD Ameritrade accounts.

Two Former Meyers Associates Alleged Excessive Trading Cost Investors $3.6M

Published on: September 25, 2018 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission is accusing brokers Jovannie Aquino and Emil Botvinnik of fraud that allegedly cost investors about $3.6M. According to the regulator, Botvinnik, who is a Florida resident and is no longer a registered representative, and Aquino who is a New York resident, recommended frequent, short-term trades, earning them about $4.6M in commissions while practically guaranteeing that their customers would lose money. Botvinnik’s alleged excessive trading took place between 6/2012 and 11/2014. Aquino’s alleged excessive trading occurred between 12/2015 to 11/2017.

Many of these customers were retail investors. A number of them were of retirement age or close to that age.

At the time of the alleged broker fraud, Aquino and Botvinnik were with Meyers Associates LP. The firm is now called Windsor Street Capital LP. Aquino then went to work with Spartan Capital Securities while Botvinnik moved on to Newport Coast Securities, SW Financial, and Worden Capital Management.