A Minnesota attorney and two San Francisco-area hedge fund promoters defrauded investors of more than $21 million by concealing the financial collapse of the fund’s only borrower. The individuals raised more than $21 million from investors in the Capital Solutions Monthly Income Fund after the fund’s sole business partner, Hennessy Financial, defaulted in May 2008, the SEC claims.
As a result, the fund “had no meaningful income-producing investments as of May 2008,” the SEC claims. “Consequently, the Fund began mostly paying existing investors out of proceeds raised from new investors” — a typical Ponzi scheme — “because the Fund had very little income relative to its obligations.”
The SEC said the individuals, who launched the fund in 2004 and owned its distributor and investment adviser, falsely assured investors that the fund “was enjoying success and weathering disruptions in the credit and real estate markets.”
Between the fund’s launch in 2004 and August 2009, they allegedly raised about $74 million from 450 investors across the country.
Meanwhile, they also ran True North, a firm the SEC has accused of accounting fraud.
Besides the individuals involved, the following are the funds involved: True North Financial Corp., Hennessey Financial Monthly Income Fund, Capital Solutions Distributors, Capital Solutions Management and Transactional Finance Fund Management.
Many of the investors were sold this fund by NFP Securities, Inc. and their brokers. If you have experienced financial losses due to your stockbroker or financial advisor’s recommendations of these funds, call Soreide Law Group for a free consultation with an attorney at: 888-760-6552.

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Soreide Law Group, PLLC, is currently investigating the sale of promissory notes to investors by their broker/dealers. Again, many conservative investors have said they were sold these notes as “low risk” when in fact, they were highly risky or fraudulent. These investments also paid significantly higher fees to the brokers, making them much more motivated to sell them to their clients.

One such broker, Stephen Michael Kosubinsky, sold fraudulent promissory notes to investors from 2003 until 2010. After the fraud was discovered, Kosubinsky committed suicide. His investors were mainly located on Long Island, NY, where he was with a financial planning firm, 21st. Century Planning, Inc., of Hauppauge, NY. He was the author of, ‘The Dirty Filthy Lies My Boker Taught Me’ and ’101 Truths About Money & Investing.’ This helped to make potential investors see him as someone with credibilty and knowledge of the industry, someone they felt they could trust.

The ‘guaranteed’ promissory notes sold by Kosubinsky never existed.  He produced phony note certificates and account statements to the duped investors. Although, some of the investors have recovered their losses through arbitrations.  Kosubinsky also worked with the following firms:  Triad Advisors, Inc., Ogilvie Security Advisors Corporation, and NFP Securities, Inc.

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