Securities Fraud: Ex-Broker Gets Prison Sentence for $1.2M Elder Financial Fraud, Massachusetts Man Admits to Bilking Neighbors, & More Than Two Dozen 27 Parties Under Fire Over Alleged Stock Promotion Scams

Former Wells Fargo and LPL Financial Broker Receives 41-Month Prison Term for Elder Financial Fraud
Robert N. Tricarico, an ex-broker for both Wells Fargo Advisors (WFC) and LPL Financial (LPLA), will serve 41 months behind bars and pay restitution of over $1.2M after he pleaded guilty to elder financial fraud. The Securities and Exchange Commission, which brought a civil case against Tricarico, has barred him from the securities industry.

Court documents note that from 1/2010 to 6/2013, Tricarico was the financial adviser for a sick and elderly investor. He misappropriated over $1.1M from her by writing a number of checks to himself without the client’s consent, misappropriated checks written to her, liquidated her coin collection, and used her funds for his own expenses.

He has also admitted to bilking two other victims of $20K when he falsely represented that their money would go toward a business venture. He kept their money for himself.

Hedge Fund Manager Pleads Guilty to Investment Fraud
Stephen S. Eubanks has pleaded guilty to one count of wire fraud. The Massachusetts man was charged last year over allegations that he bilked neighbors and acquaintances. 32 people were bilked of about $435K.

Eubanks set up the hedge fund Eubiquity Capital LLC in 2010. Even though he was no longer a registered broker and had been fired in the past because of disciplinary matters and customer complaints, in 2013 and 2014 he told two acquaintances that he was registered as a financial advisor and that his hedge fund had ties with UBS Bank (UBS), TD Ameritrade (AMTD), Goldman Sachs (GS), and Fidelity Investments. Both individuals invested money with him, as did a third person.

While Eubanks invested some of their funds, he used a substantial amount for his own spending. He made up account statements or used other account statements that had nothing to do with clients’ accounts so they would think that their investment was making them money. In Ponzi-like fashion, newer investors’ funds were used to pay earlier investors.

SEC Files Enforcement Actions Alleging Stock Promotion Scams that Involved Writers and Communications Firms
The US Securities and Exchange Commission has filed enforcement actions against more than two dozen entities and individuals accused of involvement in a stock promotion scam. Already, 17 of the parties have agreed to settlements that involved penalties of disgorgement ranging from about $22K to almost $3M, depending on the details of their alleged actions.

According to the regulator, public companies retained communications firms and promoters to drum up publicity for stocks. The firms hired writers to create articles that appeared to be “independent, unbiased analyses” and publish them on investing websites. The writers were purportedly paid in secret for writing favorably about the stocks and making it seem as if they were impartial authors when really the articles were paid advertisements.

The SEC noted that it is important that if a company pays for written publicity about a stock, then the investing public must be notified about it. Instead claims the regulator’s Division of Enforcement Acting Director Stephanie Avakian, the promoters, companies, and writers “allegedly misled” the public by pretending that paid promotions were actually analyses that were “objective and independent.”

The Commission contends that steps were taken to hide who was writing the articles and why. One writer used several pseudonyms, including pretending to be someone that was a supposedly experienced fund manager and analyst, when generating numerous articles. The SEC said that one stock promotion firm asked writers to sign non-disclosure agreements preventing them from telling anyone they were getting paid to write the articles.

The regulator brought charges against several communication and stock promotion companies, six persons at these entities, three public companies, two company CEOs, and nine writers.

Former Darien Man Barred from Financial Advising, Patch.com, April 11, 2017

The SEC Order in the Tricarico Case (PDF)

Man pleads guilty in Ponzi scheme, Massachusetts Lawyers Weekly, April 13, 2017

Hingham Man Charged with Defrauding Investors, SEC, November 22, 2016

SEC: Payments for Bullish Articles on Stocks Must Be Disclosed to Investors, SEC, April 10, 2017