Securities Lawyer Blog | Victim of Fraud?

TAG | elder abuse by stockbrokers

Jun/13

18

Blake Richards Charged with Misappropriation of Funds by the SEC

Comments off · Posted by Securities Lawyer in FINRA

BLAKE BANCROFT RICHARDS (CRD #4051402)

Blake Richards of Buford, Georgia, was charged by the Securities and Exchange Commission (SEC) with violations of the federal securities laws for misappropriating investor funds. In May, the SEC filed an emergency action seeking a temporary restraining order and other emergency relief in federal court against Richards.

The SEC’s complaint alleges that, since (at least) 2008, Richards, a registered representative of a broker/dealer, misappropriated at least $2 million from at least seven investors. The majority of the misappropriated funds constituted retirement savings and/or life insurance proceeds from deceased spouses.

The SEC also alleges that Richards instructed investors to write out checks to entities under his control with the understanding that Richards would invest their funds in fixed income assets, variable annuities and/or common stock. The complaint alleges that none of these investments were ever made. None of the investments appeared on the client’s brokerage account statements, and Richards received no commission income from these investments. The complaint further alleges that Richards used the funds for personal use.

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

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

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

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

If you experienced a 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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Jun/13

7

Were You a Victim of Michael Mendenhall?

Comments off · Posted by Securities Lawyer in FINRA

Michael Mendenhall (CRD #496391) a former broker with Colorado Financial Service Corporation and UVest Financial Services Group, Inc., was convicted of 25 counts of securities fraud and theft involving elderly victims, and sentenced to 30 years in prison and more than $1.4 million in restitution fees in Denver District Court.

The Denver District Court Judge said after sentencing, this case was unique because all of his victims had invested their life savings with him out of trust, not greed. The judge said that following his prison sentence, Mendenhall would be in a similar position to his victims when he is released, of senior age and without assets.

The original indictment identified 16 victims with losses totaling about $1.2 million. Mendenhall was also selling debentures which promised high interest rates that may have been fraudulent investments.

Just one example, the Michael Mendenhall arrest affidavit included the story of a South Dakota widower who worked for a telephone company for a years before becoming as a union representative until his retirement. After his wife’s death, the man contacted Mendenhall about a $62,000 annuity the couple had purchased together. He wanted to split it between his wife’s two children and him, but Mendenhall talked him into giving him a ninety-day loan of $61,500 to invest in a real estate deal. In the end, the document says Mendenhall only returned $10,000 of that total but wrote a promissory note for the remainder.

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

COLORADO FINANCIAL SERVICE CORPORATION
CRD# 104343
CENTENNIAL, CO
01/2010 – 10/2010

UVEST FINANCIAL SERVICES GROUP, INC.
CRD# 13787
GREENWOOD VILLAGE, CO
10/2005 – 11/2009

If you have experienced a financial loss due to Michael Mendenhall who was a broker with Colorado Financial Service Corporation, call Soreide Law Group at (888) 760-6552 for a free consultation with an attorney.

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Sep/12

18

Boynton Beach Broker Barred by FINRA for “Borrowing” Money from Elderly Client

Comments off · Posted by Securities Lawyer in FINRA

Stephen Nietsch (CRD #3111082, Registered Representative, Boynton Beach, Florida)

was barred from association with any FINRA member in any capacity and ordered to pay $20,000, plus interest, in restitution to a customer. The sanctions were based on findings that Nietsch borrowed $20,000 from an elderly customer contrary to his member firm’s procedures prohibiting him from borrowing from customers. Nietsch has not repaid the loan.

(FINRA Case #2009020385001)

The above information appears on FINRA’s website under “Disciplinary and Other FINRA Actions, September, 2012.”

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, represents clients nationwide. For a free consultation on how to potentially recover your financial losses call: 888-760-6552, or you may visit our website and complete the online form at: http://www.securitieslawyer.com.

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Feb/12

28

Palm Harbor, FL, Rep Barred by FINRA

Comments off · Posted by Securities Lawyer in FINRA

The following information was obtained on FINRA’s website’s ‘Disciplinary Actions, February 2012.”
 
Neal Seth Smalbach (CRD #1459854, Registered Principal, Palm Harbor, Florida)
 
submitted an Offer of Settlement in which he was barred from association with any FINRA member in any capacity.
 
Without admitting or denying the allegations, Smalbach consented to the described sanction and to the entry of findings that he fraudulently misrepresented the risks and omitted material facts, for the sale of an oil and gas private placement
investment to retired, senior citizen customers. The findings stated that Smalbach claimed to have conducted his own due diligence, which included reviewing the PPM, subscription agreement, promotional material and speaking with employees of the issuer and firm due diligence personnel.
 
These findings also stated that Smalbach told investors that the investment was safe and high-yielding, which was false and misleading, and Smalbach virtually guaranteed his customers a yearly dividend and the return of their principal after three years but omitted telling them that the company had no significant assets, no current cash flow, and no prior operating history which was disclosed in the subscription agreement and PPM.
 
In addition, FINRA determined that Smalbach’s recommendations were unsuitable to unaccredited customers in light of the customers’ age, limited investment experience, conservative risk tolerance and need for the preservation of principal and also unsuitable for accredited investors because of his misrepresentations and omissions of material fact.
 
These findings also included that Smalbach’s member firm required customers to complete a client information new account form that asked for customers’ contact information, investment experience, risk tolerance, investment objectives, net worth, annual income, liquid net worth, retirement horizon and other background information, and to complete subscription agreements the firm kept and maintained, but Smalbach asked customers to sign blank information forms and subscription agreements and initial risk and financial disclosures on the subscription agreement without giving some of the customers the opportunity to read what they were signing. FINRA found that Smalbach had an administrative assistant complete the forms with false information Smalbach provided, which enabled him to shroud unsuitable transactions from the firm’s supervisory review.
 
Moreover, FINRA found that Samlbach falsified client information new account forms and subscription agreements that the firm kept and maintained caused its books and records to be inaccurate. FINRA also found that as a result of these fraudulent misrepresentations, omissions and acts, Smalbach caused customers to sustain approximately $840,116 in net out-of-pocket losses on the $925,000 investment they purchased, and Smalbach received $74,000 in gross commissions from his activities. Furthermore, FINRA found that Smalbach failed to adequately respond to FINRA requests for information and documents.
(FINRA Case #2010021972801)
 

The information from FINRA’s website has ended.
 
Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide.
For a free consultation with an attorney, please call 888-760-6552, or visit our website at: www.securitieslawyer.com.

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Dec/11

1

Raymond James Pays Record $1.8M to 87-year-old Client After Appeal

Comments off · Posted by Securities Lawyer in FINRA

Raymond James Financial Services Inc., has paid a $1.79 million arbitration award to an 87-year-old client after going to state court to appeal the judgment writes Darla Mercado, in a November 30, 2011, article for the InvestmentNews.com.

The Honorable Judge Emily Tobolowsky, of the 298th Judicial District Court in Dallas last month confirmed the award and denied the broker-dealer’s motion to vacate the payment, a move that few broker-dealers attempt to make.

The FINRA arbitration panel ordered Raymond James to pay some $1.7 million in May, plus interest, to elderly client Hurshel Tyler and the estate of his deceased wife, Mildred. The sum is thought to be the largest award ever against Raymond James.

Mercado writes that the Tylers, both in their late 80s when the case first went to arbitration, had some $3.5 million in bond funds. But they allegedly were encouraged by a former Raymond James broker, then based in Amarillo, Texas, to put the money into variable annuities and variable life insurance.

This variable life insurance policy was loaded down with $2 million in improper loans — along with continuing tax and interest obligations — that would have made it difficult to return the product to the broker-dealer, according to a transcript from a court hearing in September. “From a supervisory standpoint, the large loans taken out against the policy should have been red-flagged,” the Tylers’ attorney said in an interview with InvestmentNews. The couple had contended that the investments were unsuitable; an arbitration panel from the Financial Industry Regulatory Authority Inc. decided in their favor.

In appealing this decision, Raymond James claimed that the Tylers should have returned the annuities, which had grown by more than $958,000. Initially, the elderly couple had sought return of their money, but were instead awarded compensatory damages and were not instructed to return the annuities.

Raymond James had also argued that the $250,000 it was supposed to pay the Tylers in attorneys’ fees ought to be vacated because laws in Florida — where Raymond James is based — don’t allow for such awards.

The InvestmentNews.com article goes on to say that the attorney for the Tylers asserted that Raymond James never brought up that argument in the arbitration discussions in March this year, nor did it ever object to her presentation of the case under Texas law.

“Raymond James continues to believe that the award in this matter is a miscarriage of justice. The Tylers made a profit in excess of $800,000 during the period of time that the Tylers maintained accounts with Raymond James and suffered losses when they transferred their accounts to another broker-dealer,” said the director of litigation at Raymond James. He added,”Raymond James believes the panel erroneously held Raymond James responsible for those losses. Notwithstanding that fact, Raymond James has determined, after reviewing the anticipated time and resources necessary to continue to fight what we still believe to be an erroneous award, to put the matter behind us and move forward.”

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member have experienced losses through Raymond James Financial Services, Inc., call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Nov/11

18

Laidlaw & Co. Miami Broker Accused of Elder Abuse

Comments off · Posted by Securities Lawyer in FINRA

An article appeared in the About.com Guide, written by Julie Garber regarding a Miami broker and elder abuse.  She wrote that recently a Miami news station reported on the elder abuse case of Josephine Troisi, age 93, and her sister, Mary Teris, age 95. A few years ago the sisters, who live together in Hollywood, Florida, hired 48-year old Cynthia Franke, a financial advisor with Laidlaw & Co., and 46 year-old Tyrone Javellana, a CPA and officer of a company named the Estate Planning Group, to assist the sisters with their finances. But last year Troisi’s 69-year old son, John Troisi, contacted Hollywood police when he noticed unusual activity in his mother’s checking account that was tied to Laidlaw & Co., the Estate Planning Group, and both Franke and Javellana personally.

Garber writes that after several months of digging, Hollywood police found that not only had thousand of dollars been transferred from Troisi and Teris to Franke, Javellana, and their respective companies, but John Troisi had been replaced by Javellana in a Power of Attorney and Franke had been named as a beneficiary of a trust that had been set up by Teris. When asked why she named Franke as a beneficiary of her trust, Teris said that she didn’t understand the “full implications” of doing so and it was not what she wanted.

According to Hollywood Police Lt. Scott Pardon, “What both [Franke and Javellana] did was use their relationship as a stockbroker and accountant to gain their trust. They began drawing off their account to enrich themselves without the victims permission.” Franke and Javellana have been charged with elderly exploitation.

Laidlaw allegedly failed to supervise Cynthia ‘Cinder’ Franke properly, allowing Franke to abuse elder investors. Brokers also are prohibited from recommending securities that are unsuitable for the investor. Unsuitable investments can include those securities that involve more risk than the customer is willing or able to withstand, as in this case.

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced losses with broker Cynthia ‘Cinder’ Franke of Laidlaw & Company, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

 

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Sep/11

12

Wedbush and Former Broker Ordered to Pay Investor $2.9M by FINRA

Comments off · Posted by Securities Lawyer in FINRA

A Financial Industry Regulatory Authority (FINRA) arbitration panel has ordered Wedbush Securities and one of its former brokers to pay $2.9 million in damages and fees to an elderly investor who allegedly fell victim to a faulty investment scheme. The founder Edward Wedbush, and broker Debbie Michelle Saleh were ordered to pay $2,865,885 in damages. The victim of this securities case, Rick Cooper, continued working with Debbie Michelle Saleh, who previously served as his mother’s broker, after she moved to Wedbush from Wachovia Securities LLC in 2004, stated Lorie Konish in an August 31, 2011, article in On Wall Street.

Cooper’s attorney alleges, Saleh sent him false monthly account statements while conducting unauthorized transactions and forging Cooper’s signature. That allegedly included buying unsuitable variable annuities products and selling them, then subsequently buying more unsuitable products.

Konish writes that while Saleh profited from fees and commissions from those transactions, funds in Cooper’s accounts ultimately dwindled to less than a third of the $1.86 million displayed in account statements.

It was noted in a strongly worded Aug. 26 decision, the FINRA arbitration panel concluded that Saleh intentionally misrepresented information about Cooper’s investments while making unauthorized redemptions or withdrawals.

“The panel determined that Respondent Saleh’s conduct was premeditated, egregious and unconscionable and part of a plan or scheme to defraud her customers,” the FINRA panel wrote in its decision. “Respondent Saleh’s conduct certainly borders on criminal misconduct, if not actually elevating her actions to actual criminal misconduct.”

Wedbush fought against the charges in the arbitration, arguing that the variable annuities sold to Cooper were suitable and that the firm’s supervision was adequate.

That supervision was not good enough, Cooper’s lawyer said, as the firm did not promptly respond to a Dec. 2007 letter from the Securities and Exchange Commission following an investigation on Saleh.

Saleh stepped down from her post at Wedbush in March, 2009. She was permanently barred from serving in the securities industry by FINRA in August, 2009. Her registration records show that she has also previously been named in other cases involving annuities she sold to customers.

The On Wall Street article reports that the $2.9 million award includes special damages for emotional distress, including $500,000 to be paid by Saleh, $300,000 by Wedbush and $200,000 by Wedbush Securities founder and President Edward Wedbush.

Including interest, the total award totals more than $3 million.

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you feel you have become a victim of stock/securities loss, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com

Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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