Articles Tagged with Ponzi Scheme

Ex-Securities America Broker Investigated For Ponzi Scam Involvement

The US Securities and Exchange Commission (SEC) announced that it has permanently barred ex-Securities America broker, Ronald Roach, in the wake of his involvement in a $909M Ponzi fraud. 

Ronald Roach pleaded guilty last month to criminal fraud charges and is facing up to 10 years behind bars. According to InvestmentNews, Securities America fired him the day after he entered his plea. The SEC contends that Roach and Joseph Bayliss, a general building and electrical contractor, operated an alternative energy tax credit Ponzi scam associated with the company DC Solar. 


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.

It wasn’t bad enough that over 10,000 investors, many of them retirees and other retail investors, were bilked in the $1.2B Woodbridge Ponzi scam. Now, they are allowed to borrow against what they hope to recover after the bankrupt real estate developer’s assets are liquidated but they must pay a 16% interest rate to do so.

While the rate isn’t necessarily wrong or unfair on the part of hedge fund lender Axar Capital Management—it was the investors that went to the Delaware Bankruptcy court seeking a $215M loan facility so that they could access their funds until Woodbridge’s bankruptcy proceedings are settled—the rate is still a steep sum considering that they thought that their investments would garner an approximately 8% return.

SEC Goes After Woodbridge

The attorneys with the law firm of Shepherd, Smith, Edwards & Kantas LLP are currently investigating claims involving Larry Dearman, Sr.  Larry Dearman moved to Bartlesville, Oklahoma in 2005, when he began working as a financial advisor in the area.  He was registered both with the Financial Industry Regulatory Authority (“FINRA”) as a broker, as well as being registered as an investment advisor representative, which is done through the Securities Exchange Commission (“SEC”).  Since 2005, Mr. Dearman has been registered with Cambridge Legacy Securities, LLC, Securities America, Inc., Brecek & Young Advisors, and The Focus Group Advisors.

Recently, Mr. Dearman was charged by the SEC, along with a woman named Marya Gray, of defrauding a number of his clients in a variety of ways.  According to the SEC complaint, Mr. Dearman solicited his clients to invest in an internet company and a real estate company, among others, telling those customers that these investments bore very little risk and were good investment opportunities.  Specifically, the complaint alleges that Mr. Dearman specifically solicited clients of his who had known him and his family for decades, members of his church, and people who know of him as a popular wedding singer.  All told, he collected almost $5 million from various clients for these investments.

The SEC alleges that, in reality, the money was being stolen by Mr. Dearman and his cohort, Marya Gray.  They were making Ponzi scheme style payments to earlier investors to keep those individuals complacent and to avoid arousing suspicion, all the while stealing the rest of the funds and spending it on themselves.  The SEC also claims that Ms. Gray has admitted that the real estate business had never actually conducted any business, which would add substantial credence to the fraudulent nature of these investments.


Michael Scronic Pleads Guilty in Ponzi Scheme

Michael Scronic, who touted himself as the hedge fund manager of the unregistered Scronic Macro Fund, has agreed to a US Securities and Exchange Commission ban permanently blocking him from buying or selling securities. In a parallel criminal case, Scronic pleaded guilty to securities fraud that involved 45 victims in his over $22M hedge fund fraud. His victims who suffered significant investment fraud losses included acquaintances, relatives, and friends. According to Bloomberg, investors gave him amounts ranging from $23K to $2.4M to invest.

Prosecutors contend that Scronic lied about his investment fund’s performance, touting returns of up to 13% when, in reality, the fund suffered millions of dollars in losses. About $500K, also from investors, was used to fund his own expenses, including a $12K/month New York rental, mortgage payments on a Vermont vacation home, country club and beach club membership fees, and about $15K/month in credit card expenses. The investment scam went on from 2012 through June 2017.

The US Securities and Exchange Commission has filed fraud charges against investment adviser Amrit J.S. Chahal, who founded Kane Capital Investment Group, LLC. Chahal is accused of using his company to solicit about $1.4M from about 50 people, some of them friends and family members. Now, the regulator wants a permanent injunction, penalties, and disgorgement.

According to the SEC’s securities fraud complaint, from at least 2/2015, the investment advisor targeted prospective investors by telling them he was a seasoned trader who could make clients “above-market returns” by employing a trading strategy whose risks were low. In truth, contends the Commission, Chahal had no previous substantive experience in the securities industry or in trading securities for others.

Investors gave Chahal their money with the understanding that he would use the funds to buy and sell futures, options, and commodities. He told them they would have to pay a $2.5% yearly fee and a performance-based fee that was 10% of an investor’s returns that went beyond a yearly 30% return rate. Chahal also falsely claimed that Kane Capital employed the most current software to help it garner the “highest possible profit” from every investment, with a focus on choosing investments that were high-yield and low-risk. In truth, said the Commission, the accused investment advisor “traded risky options and margins,” as well as sold and purchased commodities and futures.

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