Securities Lawyer Blog | Victim of Fraud?

Sep/14

30

Drew Brees Settles Alleged Fraud Case With Former Teammate

Drew Brees, New Orleans Saints quarterback, has settled a lawsuit with his former teammate, Kevin Houser (CRD# 4072700), who is a licensed securities broker. Houser allegedly advised Brees to invest $160,000 in tax credits. According to the court, it allegedly was investment fraud.

The lawsuit, filed in federal court in 2013, alleged the former Saints long snapper Houser, mishandled Brees’ money and failed to disclose his own financial interests in the investments which he promoted. Co-plaintiff was ex-Saints receiver David Patten who also agreed to the settlement.

Saints former players Jeremy Shockey and Gary Gibbs, and Coach Sean Payton reached their own separate settlements with Houser with this same investment.

According to FINRA’s BrokerCheck, Kevin Houser is currently registered with the following securities firm:

SECURITIES AMERICA, INC. (CRD# 10205)
1774 SETTLERS RESERVE WAY, WESTLAKE, OH 44145
Registered with this firm since 01/2009

Kevin Houser was previously registered with the following securities firm(s):

Registered Dates Firm
12/2002 – 01/2009 BRECEK & YOUNG ADVISORS, INC. (CRD# 40395) – WESTLAKE, OH

01/2001 – 03/2001 DONAHUE SECURITIES, INC. (CRD# 24330) – CINCINNATI, OH

11/1999 – 10/2000 NYLIFE SECURITIES INC. (CRD# 5167) – NEW YORK, NY

Soreide Law Group represents investors nationwide before the Financial Industry Regulatory Authority (FINRA). Call (888) 760-6552 for a free consultation.

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Sep/14

30

SEC Suspends Trading of Nine Penny Stocks

The Securities and Exchange Commission (SEC) announced that the trading of nine penny stocks has been suspended. This is part of an ongoing enforcement to combat microcap fraud.

The companies involved in the trading suspension announced on September 25th. were identified during an SEC analysis of heavily promoted microcap issuers.

These are the companies suspended from trading:

• All Grade Mining Inc. (HYII)
• Bluforest Inc. (BLUF)
• DHS Holding Co. (DHSM)
• Essential Innovations Technology Corp. (ESIV)
• Global Green Inc. (GOGC)
• Inova Technology Inc. (INVA)
• mLight Tech Inc. (MLGT)
• Solar Thin Films Inc. (SLTZ)
• Xumanii International Holdings Corp. (XUII)

If your stock broker/financial advisor recommended any of these penny stocks to you and you lost more than $50,000, call Soreide Law Group at (888) 760-6552 for a free consultation with an attorney on how to potentially recover your losses.

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Sep/14

29

Atlanta Brokerage Must Pay $4 Million FINRA Award

A group of investors from Resource Horizons Group, Atlanta, was awarded more than $4 million by the Financial Industry Regulatory Authority, Inc. (FINRA). Allegedly, Resource Horizons Group failed to meet regulatory net capital requirements.

Resource Horizons Group has approximately 220 brokers and financial advisors. The FINRA arbitration panel held the firm responsible for $3.5 million in investor losses suffered when a former broker at the firm allegedly used client funds for his personal use. This award included almost $1 million in punitive damages.

The arbitration related to ROBERT GIST (CRD# 716088), a broker at the firm who agreed in 2013, to pay to pay $5.4 million to settle charges from the SEC that he had converted around the same amount from at least 32 customers for personal use between 2003 and last year. Gist conducted the scheme and made false customer statements for clients through Gist, Kennedy & Associates Inc., an unregistered entity not affiliated with Resource Horizons, according to the SEC’s complaint.

This case was filed on behalf of six client and a family trust who felt closer attention should have been paid to Gist, who according to FINRA’s BrokerCheck, had several disputes and other disclosures on his record prior to being hired in 2001. Gist was barred by FINRA and the SEC.

When a firm falls below net capital requirements it is no longer allowed to do business and must direct customers to place orders directly with its clearing firm.

According to FINRA’s BrokerCheck, Robert Gist was previously registered with FINRA at the following brokerage firms:

RESOURCE HORIZONS GROUP LLC
CRD# 104368
ATLANTA, GA
03/2001 – 12/2011

CENTENNIAL CAPITAL MANAGEMENT, INC.
CRD# 38988
ATLANTA, GA
11/1997 – 03/2001

CADARET, GRANT & CO., INC.
CRD# 10641
SYRACUSE, NY
07/1993 – 09/1997

If you experienced a financial loss due to Robert Gist, a former broker with Resource Horizons Group, call Soreide Law Group at (888) 760-6552 for a free consultation with an attorney.

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Sep/14

29

Warning to Seniors: Beware of Investment Fraud!

With the growing number of our citizens reaching 60 or above, we are also seeing a growing number of victims of investment fraud in this age group. In fact, people over the age of 60 account for over thirty percent of investment fraud victims.

Most seniors are living on a fixed income. These investment losses can devastate the lifestyle and retirement of a senior who gets taken advantage of by their broker/financial advisor.

Seniors are often targeted for several reasons. They have savings available for their retirements, they want a promised guaranteed return, they are trusting, and may not be aware of the ‘total picture’ of what they are investing in, or they may be embarrassed or reluctant to report the fraud to their family or the proper authorities. Some seniors may not understand what exactly they are getting into and may be attracted to Ponzi-type schemes, insurance frauds, Internet fraud, and several other marketing campaigns aimed right at the senior investors taking advantage of their trusting nature.

If you are contacted by a broker/financial advisor by phone, in person, or by the Internet, before you even consider investing with them make sure to ask the following questions:

1. How did you get my name?
2. Is there risk involved in this investment? Is it liquid, can I get my money out?
3. Can you explain this investment to me?
4. Who do you work for, and can you give me your references?
5. Can you explain this investment to my family member, attorney or accountant?
6. Will you meet me in person? Then take a trusted friend or family member.

At Soreide Law Group we highly recommend you look up the broker on FINRA’s BrokerCheck before investing. Some of the very valuable information you will find there is the broker report summary giving the credentials and qualifications of the broker, registration and employment history, and their disciplinary history including past and present disputes.

If you or an elderly family member have had financial losses due to your broker/financial advisor, call the Soreide Law Group for a free consultation on how to potentially recover those losses at 888-760-6552. We represent clients nationwide before FINRA.

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Soreide Law Group has filed several FINRA arbitration claims against financial advisors who were allegedly involved in a ‘pump-and-dump’ scheme involving shares of Cubed, Inc., The Staffing Group Ltd., CodeSmart, and StarStream Entertainment Inc.

In a ‘pump-and-dump’ scheme, the broker/financial advisor pumps up the price of the stock to their clients to give the appearance that it is in demand after they have personally purchased it at lower price. This artificially increases the stock’s value. When the stock price begins to rise, brokers then purchase the stock for their clients. When the price is high after a demand is created, the brokers dump their shares, and the stock which has an inflated value, drops considerably and the client in turn loses their investment after the broker has personally cashed in his stock on the upswing.

From 2012, the brokers allegedly purchased shares in Cubed, Inc., The Staffing Group Ltd., CodeSmart, and StarStream Entertainment Inc. for their clients, even when they were ‘dumping’ their own shares in the companies. Currently, several brokers involved in this scheme have been indicted by the U.S. Attorneys Office in New York, and the U.S. Securities & Exchange Commission (SEC) has filed a civil action against them.

Soreide Law Group will represent clients nationwide before FINRA. If your broker/financial advisor involved you in this ‘pump and dump’ scheme and you have experienced heavy financial losses, please call an attorney for a free consultation on how to potentially recover your losses: 888-760-6552.

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Sep/14

25

Feltl Pays $1Million Fine for Penny Stock Violations and Replaces Top Execs

Feltl & Co., based in Minneapolis, paid a $1 million fine for alleged supervisory failures, among other things, while overseeing penny stock, and it has now replaced several executives, including it’s general counsel, chief compliance officer, head trader, and a branch manager.

FINRA reported that Feltl also failed to comply with customer-suitability, disclosure, and record-keeping requirements. Feltl did not provide risk-disclosure documents to customers before trading penny stocks, which are considered to be high risk and speculative.

According to FINRA, Feltl solicited their clients to make at least 2,450 purchases of 17 penny stocks and received $2.1 million from the transactions. FINRA said it was unable to gauge the total number of trades because of their incomplete records.

If you’ve purchased high-risk penny stocks at the recommendation of your stock broker/financial advisor, please contact Soreide Law Group at (888) 760-6552 for a free consultation on how to potentially recover your losses. We represent clients nationwide before FINRA.

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Sep/14

24

Former Pennsylvania Broker Pleads Guilty to Fraud Charges

JOSEPH R. GALLARDO (CRD# 4100045A), 48, formerly from Bartonsville, Pennsylvania, pled guilty in federal court to mail fraud, a charge stemming from an investment fraud which caused his clients a combined loss of $1.8 million.

According to court documents, allegedly Gallardo persuaded clients to invest in Blue Meadow Group LLL, which was his own personal real-estate venture. Victims were guaranteed high rates of return and were incorrectly advised that their money was invested in and protected by real estate. However, Blue Meadow Group was not a real-estate investment trust and it was not registered. Instead Gallardo used the money to buy a gas station and convenience store and to fund his own online trading account, which lost a considerable amount of money.

JOSEPH R. GALLARDO, according to FINRA’s BrokerCheck, was previously registered with the following securities firm(s):

11/2008 – 02/2009 BROKERSXPRESS LLC (CRD# 127081) – BARTONSVILLE, PA

12/2003 – 12/2008 INVESTORS CAPITAL CORP. (CRD# 30613) – LYNNFIELD, MA

09/2001 – 12/2003 QUICK & REILLY, INC. (CRD# 11217) – NEW YORK, NY

05/2001 – 09/2001 ESSEX NATIONAL SECURITIES, INC. (CRD# 25454) – NAPA, CA

07/2000 – 04/2001 AMERICAN EXPRESS FINANCIAL ADVISORS INC. (CRD# 6363) – MINNEAPOLIS, MN

07/2000 – 04/2001 IDS LIFE INSURANCE COMPANY (CRD# 6321) – MINNEAPOLIS, MN

Soreide Law Group will represent clients nationwide before FINRA. Call for a free consultation with an attorney: 888-760-6552.

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Sep/14

23

FINRA

Many Soreide Law Group clients, and readers of our blog, often hear us refer to “FINRA.” FINRA is the abbreviation of the Financial Industry Regulatory Authority, Inc. In case you are wondering what FINRA is and what they do, we will give you a very brief synopsis.

FINRA is responsible for regulating it’s member firms and the exchange markets located in our country. They protect the investors and keep the markets fair and honest through the regulation of the securities industry.

FINRA is not-for-profit organization and is not a part of the government. They are independent, and authorized by Congress to protect investors by being the ‘watch dog,’ so to speak, of the securities industry.

FINRA enforces their standards by: educating investors, writing and enforcing rules governing the activities of securities firms and their brokers, making sure the firms comply with the rules, and insuring market transparency.

FINRA is responsible for licensing brokers and firms. FINRA maintains their “BrokerCheck” which is available free on their website to the public. BrokerCheck helps investors research the backgrounds of brokerage firms and brokers who are currently or formerly registered with FINRA. This includes current licensing status and history, employment history and reported regulatory, customer dispute, criminal and other matters. FINRA suggests that BrokerCheck should be “the first resource investors turn to when choosing whether to do business or continue to do business with a particular firm or individual.” This very valuable tool is available on FINRA’s website finra.org.

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Sep/14

22

Former LPL Broker from Georgia ordered to Pay Back Elderly Clients $1.8 Million

BLAKE B. RICHARDS (CRD# 4051402) of Buford, Georgia, was accused May 2013 of misappropriating money from elderly investors and ordered to repay $1.8 million. This was ordered in a judgment by the Securities and Exchange Commission (SEC). An additional $80,000 was added as a civil penalty according to a press release from the SEC.

The SEC charged Richards in 2013 with misappropriation of funds from at least seven of his clients from as far back as 2008. Allegedly Richards asked his clients to write checks to entities under his control with the understanding that he would invest his clients money. However, none of the investments were ever made.

With the clients being primarily elderly, the investments were from retirement savings and life insurance proceeds which totaled $1.7 million. The $1.8 million judgment from the SEC includes interest.

FINRA has permanently barred Blake Richards from acting as a broker or otherwise associating with firms that sell securities to the public.

Blake Richards was previously registered with the following securities firm(s):

05/2009 – 05/2013 LPL FINANCIAL LLC (CRD# 6413) – BUFORD, GA

02/2007 – 05/2009 AMERIPRISE ADVISOR SERVICES, INC. (CRD# 5979) – DULUTH, GA

08/2004 – 02/2007 A. G. EDWARDS & SONS, INC. (CRD# 4) – BRASELTON, GA

04/2000 – 08/2004 EDWARD JONES (CRD# 250) – ST. LOUIS, MO

If you’ve experienced financial loss due to Blake Richards, call Soreide Law Group for a free consultation with an attorney on how to potentially recovery your investment at: 888-760-6552.

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JOHN M. BABIARZ (CRD# 3047247), a former broker from Peabody, Massachusetts, was sentenced to four years in federal prison and could lose his home, car, his investment account and $645,000 he admitted stealing from his elderly clients. Babiarz, 40, plead guilty in May to wire fraud and aggravated identity theft.

Babiarz contacted several of his former clients after he lost his job with Bishop, Rosen & Co., based in New York. Babiarz admitted telling some of his former clients that he was now working with Fidelity Investments, and other clients that he was working as an independent broker. He managed to convince his former clients, many of whom were elderly and not savvy in using the Internet, to allow him to continue managing their money, and set up accounts online with Fidelity in their names, where he was NOT employed. Babiarz had full access to their accounts including user names and passwords, which meant he had full access to their money.

John M. Babiarz then transferred funds out of the accounts into his own account, or used the clients’ accounts to borrow money for himself to make his own investments. He used the money to purchase among other things, a home and a car.

According to FINRA’s BrokerCheck, JOHN M. BABIARZ was previously registered with the following securities firm(s):

Registered Dates Firm
11/2009 – 09/2011 BISHOP, ROSEN & CO., INC. (CRD# 1248) – NEWTON, MA
06/2009 – 07/2009 CAPITOL SECURITIES MANAGEMENT, INC. (CRD# 14169) – WORCESTER, MA
11/2004 – 06/2009 JESUP & LAMONT SECURITIES CORP (CRD# 39056) – WORCESTER, MA
FINRA expelled the firm in 11/2010
05/2002 – 11/2004 PRIMEVEST FINANCIAL SERVICES, INC. (CRD# 15340) – ST. CLOUD, MN
05/2001 – 05/2002 LINSCO/PRIVATE LEDGER CORP. (CRD# 6413) – BOSTON, MA
04/1999 – 05/2001 INVESTORS CAPITAL CORP. (CRD# 30613) – LYNNFIELD, MA
01/1999 – 04/1999 DEAN WITTER REYNOLDS INC. (CRD# 7556) – PURCHASE, NY
06/1998 – 01/1999 BEAR, STEARNS & CO. INC. (CRD# 79) – NEW YORK, NY

If you or an elderly family member suffered financial losses due to your broker/financial advisor, call Soreide Law Group for a free consultation on how to potentially recover those losses at 888-760-6552. We represent clients nationwide before FINRA.

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