Fraud Charges Filed Against Owners of Jay Peak Ski Resort Relating to Millions of Dollars Solicited under the EB-5 Immigrant Investors Program

The Securities and Exchange Commission recently announced fraud charges and an asset freeze against a Vermont-based ski resort and related businesses allegedly misusing millions of dollars raised through investments solicited under the EB-5 Immigrant Investor Program. The Securities and Exchange Commission filed a complaint for Injunctive and Other Relief against Ariel Quiros, William Stenger, Jay Peak, Inc., Q Resorts, Inc., Jay Peak Hotel Suites L.P., Jay Peak Hotel Suites Phase II L.P., Jay Peak Hotel Suites Phase II L.P., Jay Peak Management, Inc., Jay Peak Penthouse Suites L.P., Jay Peak GP Services, Inc., Jay Peak Golf and Mountain Suites L.P., Jay Peak GP Services Golf, Inc., Jay Peak Lodge and Townhouses, L.P., Jay Peak GP Services Lodge, Inc., Jay Peak Hotel Suites Stateside L.P., Jay Peak GP Services Stateside, Inc., Jay Peak Biomedical Research Park L.P., and AnC Bio Vermont GP Services, LLC. The SEC’s case was unsealed in federal court in the United States District Court Southern District of Florida, and the court has appointed a receiver over the companies to prevent any further spending of investor assets.

The SEC alleges that Ariel Quiros of Miami, Florida, William Stenger of Newport, Vermont, and their companies made false statements and omitted key information while raising more than $350 million from investors to construct ski resort facilities and a biomedical research facility in Vermont. According to the SEC complaint, investors were told they were investing in one of several projects connected to Jay Peak Inc., a ski resort operated by Quiros and Stenger, and their money would only be used to finance that specific project. The SEC complaint alleges that instead, in Ponzi-like fashion, money from investors in later projects was misappropriated to fund deficits in earlier projects. The SEC complaint alleges that more than $200 million was used for other-than-stated purposes, including $50 million spent on Quiros’s personal expenses and in other ways never disclosed to investors.

According to the SEC’s complaint, Quiros improperly tapped investor funds for such things as the purchase of a luxury condominium, payment of his income taxes and other taxes unrelated to the investments, and acquisition of an unrelated ski resort. The SEC’s complaint charges Quiros, Stenger, Jay Peak, and a company owned by Quiros called Q Resorts Inc., as well as, seven limited partnerships and their general partner companies with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Four other companies are named as relief defendants in the SEC’s complaint for the purpose of recovering investor funds transferred into their accounts.

If you have suffered investment losses contact the Law Offices of Place & Hanley, LLC to discuss your legal options. The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide. You may be entitled to recover your investment losses. Contact our office toll free at (866) 318-4725 for a complimentary initial consultation.

Categories: Broker Fraud and Securities Fraud.

SEC Charges Aequitas Management with Defrauding Investors

The Securities and Exchange Commission recently announced that it charged an Oregon-based investment group and three top executives with hiding the rapidly deteriorating financial condition of its enterprise while raising more than $350 million from investors.  Aequitas Management LLC and four affiliates allegedly defrauded more than 1,500 investors nationwide into believing they were making health care, education, and transportation-related investments when their money was really being used in a last-ditch effort to save the firm.  Some money from new investors was allegedly used to pay earlier investors.

The SEC’s complaint, filed today in federal district court in Oregon, alleges that CEO Robert J. Jesenik and executive vice president Brian A. Oliver were well aware of Aequitas’s calamitous financial condition yet continued to solicit millions of dollars from investors to pay the firm’s ever-increasing expenses and attempt to stave off the impending collapse.  Former CFO and chief operating officer N. Scott Gillis allegedly concealed the firm’s insolvency from investors and was aware that Jesenik and Oliver continued soliciting investors so that Aequitas could pay operating expenses and repay earlier investors with money from new investors.

“We allege that Aequitas had severe and persistent cash flow shortages and top executives knew they weren’t using money raised from investors like they said they would.  But they refused to disclose the true financial condition, continued to draw lucrative salaries, and roped even more unknowing investors into a losing venture,” said Jina L. Choi, Director of the SEC’s San Francisco Regional Office.

According to the SEC’s complaint:

  • From January 2014 to January 2016, Aequitas raised money from investors by issuing promissory notes with high rates of return typically ranging from 8.5 to 10 percent.
  • While Aequitas did use some investor money to acquire trade receivables in health care, education, transportation, and other consumer credit sectors, the vast majority was concentrated in student loan receivables of for-profit education provider Corinthian Colleges.  Corinthian defaulted on its recourse obligations to Aequitas in mid-2014, which significantly exacerbated the firm’s already severe cash flow problems.
  • The executives continued to draw their lucrative salaries, use a private jet, and attend posh dinner and golf outings, all at the expense of investors.  They used the outings to raise more money from investors.  Jesenik, Oliver, and Gillis took home at least $2.5 million in combined salaries during this period.
  • By November 2015, Aequitas could no longer meet scheduled redemptions.  Last month, the firm dismissed two-thirds of its employees and hired a chief restructuring officer.

The SEC’s complaint charges violations of the federal securities laws by Aequitas Management, Aequitas Holdings LLC, Aequitas Commercial Finance LLC, Aequitas Capital Management Inc., and Aequitas Investment Management LLC as well as Jesenik, Oliver, and Gillis.  The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and monetary penalties from all defendants as well as bars prohibiting Jesenik, Oliver, and Gillis from serving as officers or directors of any public company.

Aequitas and the affiliated entities have agreed to be preliminarily enjoined from raising any additional funds by offering and selling securities, and agreed to the appointment of a receiver to marshal and preserve remaining Aequitas assets for distribution to defrauded investors.  The stipulated orders are subject to court approval.

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Law Offices of Place & Hanley, LLC to discuss your legal options. The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (866) 318-4725 for a complimentary initial consultation.

Categories: Investor Protection, Securities Fraud, and Securities Investigations.

SEC Charges Wells Fargo With Fraud in 38 Studios Bond Offering

The Securities and Exchange Commission recently announced that it had charged a Rhode Island agency and its bond underwriter Wells Fargo Securities with defrauding investors in a municipal bond offering to finance startup video game company 38 Studios. 

The Rhode Island Economic Development Corporation (RIEDC, now called the Rhode Island Commerce Corporation) issued $75 million in bonds for the 38 Studios project as part of a state government program intended to spur economic development and increase employment opportunities by loaning bond proceeds to private companies.

According to the SEC’s complaint filed in federal district court in Providence:

  • The RIEDC loaned $50 million in bond proceeds to 38 Studios.  Remaining proceeds were used to pay related bond offering expenses and establish a reserve fund and a capitalized interest fund.
  • The loan and, in turn, bond investors would be repaid from revenues generated by video games that 38 Studios planned to develop.
  • The bond offering document produced by the RIEDC and Wells Fargo failed to disclose to investors that 38 Studios had conveyed it needed at least $75 million in funding to produce a particular video game.
  • Therefore, investors weren’t fully informed when deciding to purchase the bonds that 38 Studios faced a funding shortfall even with the loan proceeds and could not develop the video game without additional sources of financing.
  • When 38 Studios was later unable to obtain additional financing, the video game didn’t materialize and the company defaulted on the loan.

The SEC also charged Wells Fargo’s lead banker on the deal, Peter M. Cannava, and two then-RIEDC executives Keith W. Stokes and James Michael Saul with aiding and abetting the fraud.  Stokes and Saul agreed to settle the charges without admitting or denying the allegations and must each pay a $25,000 penalty.  They are prohibited from participating in any future municipal securities offerings.  The SEC’s litigation continues against Cannava, Wells Fargo, and RIEDC.

The SEC’s complaint further alleges that Wells Fargo and Cannava misled investors in an additional way in bond offering materials:

  • Wells Fargo disclosed its bond offering compensation as a share of the placement agent fee plus a $50,000 payment from 38 Studios.  No other fees or compensation to Wells Fargo were disclosed, and the bond placement agreement stated that no other money was anticipated.
  • Investors weren’t informed that Wells Fargo had a side deal with 38 Studios that enabled the firm to receive nearly double the amount of compensation disclosed in offering documents.
  • This additional compensation, totaling $400,000 and paid from bond proceeds, created a conflict of interest that Wells Fargo should have disclosed to bond investors.
  • Cannava was responsible for Wells Fargo’s failure to disclose its additional fees.

The SEC’s complaint charges the RIEDC and Wells Fargo with violations of Sections 17(a)(2) and (a)(3) of the Securities Act of 1933, and charges Stokes, Saul, and Cannava with aiding and abetting those violations.  Wells Fargo also is charged with violations of Section 15B(c)(1) of the Securities Exchange Act of 1934 and Rules G-17 and G-32 of the Municipal Securities Rulemaking Board (MSRB).  Cannava is charged with aiding and abetting those violations.

In a separate administrative proceeding, the RIEDC’s financial advisor for the bond offering – First Southwest Company LLC – agreed to settle charges that it violated MSRB rules by failing to document in writing the scope of the services the firm was providing in the bond offering until seven months after the financial advisory relationship began.  Without admitting or denying the findings, First Southwest agreed to pay disgorgement of $120,000, prejudgment interest of $22,400, and a penalty of $50,000.

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Law Offices of Place & Hanley, LLC to discuss your legal options. The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (866) 318-4725 for a complimentary initial consultation.

 

Categories: Broker Investigations, Investor Protection, Securities Broker Misconduct, Securities Fraud, and Securities Investigations.

Study Shows 7% of Financial Advisors are Disciplined for Misconduct

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Investment News reported that a new working paper by business school professors at the University of Chicago and University of Minnesota found that 7% of financial advisers have been disciplined for misconduct that ranges from putting clients in unsuitable investments to trading on client accounts without permission. That’s a troubling mark for an industry that relies on the trust of clients. And some large, well-regarded firms have misconduct records that far exceed the average. Nearly 20% of financial advisers at Oppenheimer & Co., with more than 2,000 advisers counted in the study, have misconduct records, according to the new paper.

“It’s everywhere, not just small firms. It is pervasive,” said Amit Seru, a finance professor at the University of Chicago’s Booth School of Business and a co-author of “The Market for Financial Adviser Misconduct.”

Seru considers the study to be conservative in measuring misconduct. The paper homed in on just six of 23 categories of disclosure in the BrokerCheck database considered “indicative of adviser misconduct.” The database is overseen by the Financial Industry Regulatory Authority, or FINRA, the industry’s self-regulatory organization. The study counted as misconduct disclosures about an “investment-related arbitration or civil suit … that resulted in an arbitration or civil judgment for the customer,” as well as formal proceedings by regulators “for a violation of investment-related rules,” among other alleged infractions.

Misconduct isn’t left unchecked by financial firms. About half of advisers found to have committed misconduct are fired — although 44% of advisers who leave a job due to misconduct are hired by another firm within a year, according to the paper. Many fired advisers end up moving to firms that have higher rates of misconduct than their previous employer did, and they become repeat offenders. “Prior offenders are five times as likely to engage in new misconduct as the average financial adviser,” the study found.

“This is eye-opening and suggests not only that some firms have a high tolerance for misconduct on the part of their employees, but that their very business model is to attract the broker who can generate high revenue at the cost of repetitive disciplinary violations,” said John Coffee, a professor at Columbia Law School in New York. “FINRA needs to focus on this.”

The first-of-its-kind study names names, listing 10 advisory firms with the highest misconduct rates, as well as those with the lowest.

(a)% of advisers who have been disciplined for misconduct
Rank Firm Misconduct Rate #Adviser
1 Oppenheimer & Co. 19.60% 2,275
2 First Allied Securities 17.72% 1,112
3 Wells Fargo Advisors 15.30% 1,797
4 UBS Financial Services 15.14% 12,175
5 Cetera Advisors 14.39% 1,432
6 Securities America 14.30% 2,546
7 National Planning Corp. 14.03% 1,760
8 Raymond James Financial Inc. 13.74% 5,495
9 Stifel Nicolaus & Co. 13.27% 4,008
10 Janney Montgomery Scott 13.27% 1,394
(b)% of advisers who have been disciplined for misconduct
If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Law Offices of Place & Hanley, LLC to discuss your legal options. The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (866) 318-4725 for a complimentary initial consultation.
Categories: Securities Broker Misconduct.

NFA Bars Christopher Hogan, Thomas Heneghan, Amanda Murphy and Andrey Zhukov of Portfolio Managers, Inc.

Commodities

The National Futures Association (NFA) has permanently barred Portfolio Managers, Inc. (PMI), an NFA Member introducing broker located in Streamwood, Ill., and PMI’s LA branch office associated persons (AP) Christopher M. Hogan and Thomas G. Heneghan from membership and from acting as principals of an NFA Member. In addition, NFA barred PMI’s sole principal Amanda L. Murphy from membership and from acting as a principal of an NFA Member for four years, and its LA branch office AP Andrey A. Zhukov for three years.

NFA alleged that between October 2012 and August 2015 all but two of the LA branch office’s 68 customers lost money, totaling about $1.2 million, and paid over $660,000 in commissions.  A red flag to investors may be if your broker trades your account frequently resulting in a cumulatively large amount of commissions.

The Decisions are based on a Complaint authorized by NFA’s Business Conduct Committee (BCC) on December 21, 2015, and a settlement offer submitted by PMI and Murphy. An NFA Hearing Panel found that PMI, acting through the APs at its LA branch office, made misleading, deceptive and high-pressure sales solicitations, and willfully submitted false and misleading information to NFA. In addition, the Hearing Panel found that PMI and Murphy failed to supervise PMI’s operations and its APs’ sales practices. The BCC found that Heneghan and Zhukov made misleading and deceptive sales solicitations to customers and used high-pressure sales tactics. The BCC also found that Hogan provided NFA with materially false and misleading information, and failed to diligently supervise the operations and employees of PMI.

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Law Offices of Place & Hanley, LLC to discuss your legal options. The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (866) 318-4725 for a complimentary initial consultation.

The complete text of the Complaint, the PMI and Murphy Decision, and the Heneghan, Hogan and Zhukov Decision can be viewed on NFA’s website.

Categories: Commodities Fraud.

SEC Charges Wade James Lawrence with Unauthorized Trading and Fraud

The Securities and Exchange Commission recently announced that it charged Wade James Lawrence, a former investment adviser  with executing unauthorized trades in his clients’ investment accounts and defrauding other individuals who tried to invest their money with him.The SEC’s complaint, filed in federal court in Texas, alleges that:

  • Starting in 2010 while employed at the first firm, Lawrence executed unauthorized trades in speculative, high-risk securities in several of his clients’ accounts.
  • After joining the other firm in August 2011, Lawrence continued to place unauthorized trades of risky securities in his clients’ accounts.
  • Between 2010 and 2013, Lawrence’s clients lost at least $2 million due to his improper and unauthorized trading.
  • Lawrence fraudulently obtained approximately $480,000 from at least five individuals by claiming that he could trade securities for them at prices lower than those available to the general public and in securities that were not otherwise available to individual investors.
  • Immediately after receiving the investors’ funds, Lawrence used most of the money for personal expenditures and to repay personal debts, while returning a portion of the funds disguised as investment profits.

In a related action, on August 25, 2015, Lawrence pleaded guilty to fraud charges and, on January 20, 2015 was sentenced to 36 months imprisonment, ordered to pay $1,454,384.48 in restitution, and ordered to forfeit $126,074.10 as a result of his conduct.

Lawrence has agreed to settle the SEC’s action by consenting to a court order that enjoins him from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940; orders him to disgorge $458,700 plus prejudgment interest of $32,101.13, but deems payment of these amounts satisfied by the entry of the criminal restitution and forfeiture orders; and does not order the payment of a civil penalty based in consideration of his criminal conviction and 36-month sentence. The settlement is subject to court approval.

Lawrence was previously registered with:

08/2011 – 12/2013 SOUTHWEST SECURITIES, INC. (CRD# 6220) – DALLAS, TX

06/2008 – 07/2011 OPPENHEIMER & CO. INC. (CRD# 249) – FORTH WORTH, TX
If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Law Offices of Place & Hanley, LLC to discuss your legal options. The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (866) 318-4725 for a complimentary initial consultation.
Categories: Broker Fraud, Broker Investigations, and Investor Protection.

Attention Purchasers of IceWEB, Inc. (IWEB)

The Financial Industry Regulatory Authority (FINRA) announced that it barred broker George Johnson from the securities industry for engaging in a manipulative trading scheme to artificially inflate the market price and trading volume for the common stock of IceWEB, Inc. (OTCBB: IWEB). FINRA also sanctioned Christopher Wynne, Johnson’s supervisor, suspending him for two years in all capacities, barring him in a principal capacity, and fining him $25,000. Joseph Mahalick, another broker who worked with Johnson and Wynne, was suspended for six months and fined $20,000 for falsifying firm records and has been barred from the securities industry in a separate action. Johnson, Wynne and Mahalick all worked for Meyers Associates L.P. in that firm’s Chicago branch office during the time period of the misconduct.

FINRA found that over an eight-day period, Johnson manipulated the market for IWEB by recommending that certain of his customers buy at increasingly higher and artificially inflated prices while also recommending his other customers sell their shares, frequently matching trades between the customers. FINRA found that among Johnson’s motives for manipulating the stock was the fact that he wanted to obtain business from the issuer for which he would anticipate receiving compensation in connection with a future private offering. Johnson coordinated a campaign with a stock promoter to attempt to increase the stock’s share price to a level that would allow for the exercise of certain warrants.

FINRA also found that Johnson and Wynne sent customers IWEB sales materials that omitted information concerning material conflicts of interest and material risks concerning IWEB’s business, and contained misleading, exaggerated and unwarranted information. Moreover, Johnson disclosed confidential information to potential purchasers concerning another offering.

In addition to the IWEB scheme, FINRA found that Johnson committed fraud by recommending that certain of his customers purchase shares of another penny stock without disclosing to them that he was liquidating his own personal positions of the security from his own brokerage accounts.

In addition, FINRA’s investigation found that to cover up Johnson’s violations of state securities registration requirements, Johnson, Mahalick and Wynne agreed to the practice of entering false information on more than 100 order memoranda, indicating that Wynne or Mahalick was responsible for the account or transactions, instead of Johnson.

In settling this matter, Johnson, Wynne and Mahalick neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Law Offices of Place & Hanley, LLC to discuss your legal options. The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (866) 318-4725 for a complimentary initial consultation.

Categories: Broker Fraud and Investor Protection.

Federal Court Orders Cindy and Paul Vandivier to Pay Civil Monetary Penalties and Restitution of Almost $3 Million to Settle CFTC Charges of Operating an Illegal, Off-Exchange Precious Metals Scheme

The Vandiviers Were also Charged with Misappropriating Virtually All of Customer Funds, Using the Money for Office and Personal Expenses

Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court Consent Order imposing a permanent injunction against CFTC Defendants Cindy Vandivier and Paul Vandivier of Coconut Creek, Florida. The Court’s Order requires the Vandiviers to each pay a $1 million civil monetary penalty and jointly to pay $986,763 in restitution to defrauded customers to settle CFTC charges of fraudulently soliciting customers and misappropriating customer funds in connection with illegal, off-exchange transactions in precious metals. Cindy Vandivier is the wife of Paul Vandivier.

The Order, entered on February 5, 2016, by Judge William J. Zloch of the U.S. District Court for the Southern District of Florida, also imposes permanent trading and registration bans on the Vandiviers and prohibits them from further violations of the anti-fraud and off-exchange trading provisions of the Commodity Exchange Act and CFTC Regulations, as charged.

The Order arises out of a CFTC Complaint filed on May 12, 2014. The Complaint charged the Vandiviers and their company, Mintline, Inc., with fraudulently soliciting retail customers and misappropriating customer funds in connection with illegal, off-exchange transactions in precious metals, from July 2011 to at least April 2013 (see CFTC Complaint and Press Release 6934-14). The CFTC’s litigation against Mintline is still ongoing, as Mintline is currently in default in this action, awaiting the entry of a default Order by the Court.

According to the Order, the Vandiviers, through Mintline, solicited retail customers throughout the United States to purchase physical metals on a leveraged, margined, or financed basis. The Order finds, however, that contrary to what customers were led to believe, the Vandiviers did not purchase, sell, transfer ownership of, deliver, or arrange for storage of any physical metals in connection with the financed metals transactions. Instead, according to the Order, they misappropriated most, if not all, of customers’ funds to pay Mintline’s operating expenses and to pay for personal expenses, including animal, automobile, communication, employee, medical, and shopping expenses. As a result of the Vandiviers’ fraudulent activities, Mintline’s customers lost a total of $986,763, according to the Order.

The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Law Offices of Place & Hanley, LLC to discuss your legal options. The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (866) 318-4725 for a complimentary initial consultation.

Categories: Commodities Fraud.

CFTC Charges Dania Beach, Florida Resident Rico Omar Cox with Commodity Trading Advisor Fraud

Cox allegedly used websites such as Craigslist to fraudulently solicit approximately $500,000 from investors

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced that it filed a civil injunctive anti-fraud enforcement action in the U.S. District Court for the Southern District of Florida against 29-year-old Rico Omar Cox (aka Omar Negron) of Dania Beach, Florida. The CFTC Complaint charges that, beginning in at least August 2010 through March 2015, Cox fraudulently solicited his trading services for managed commodity futures accounts, and lost most of the $499,000 he traded for or on behalf of at least nine clients.

The Complaint charges that Cox created and distributed promotional materials to prospective clients that intentionally or recklessly contained materially false and misleading statements and failed to disclose material facts, including making false claims about his experience and success as a trader. After losing almost all of the investors’ funds trading, he provided some investors with false account statements to hide the losses, the Complaint also charges.

Specifically, Cox allegedly fraudulently solicited prospective customers on websites such as Craigslist and falsely claimed that he had been a successful full-time futures trader for years and made thousands of dollars and/or returns of 10 percent to 40 percent daily. As alleged, Cox also provided fraudulent trading account statements as part of a false track record that materially overstated his trading profitability and success. Cox allegedly created and distributed to customers false daily account statements and/or screen shots that showed trading profits and account cash balances, when in reality, excluding client withdrawals of approximately $117,000, Cox lost no less than $381,000 – virtually all of the remaining funds – trading those accounts using his clients’ login credentials.

Cox allegedly failed to disclose that he had felony convictions in 2013

In addition, Cox failed to disclose that he had felony convictions in 2013 for fraud, grand theft, and acting as an unlicensed mortgage broker, and he failed to register with the CFTC as a Commodity Trading Advisor, as required, according to the Complaint.

In its continuing litigation, the CFTC seeks a permanent injunction from future violations of federal commodities laws, permanent registration and trading bans, disgorgement of ill-gotten gains, and civil monetary penalties.

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Law Offices of Place & Hanley, LLC to discuss your legal options. The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (866) 318-4725 for a complimentary initial consultation.

Categories: Commodities Fraud.

Worth Group Inc. Sanctioned

Federal Court Orders Florida-Based Worth Group Inc. and Its Principals, Andrew Wilshire and Eugenia Mildner, to Pay $2.5 Million in Sanctions for Illegal Off-Exchange Precious Metals Scheme

Defendants Ordered to Comply with the Law of the Eleventh Circuit for all Financed Transactions and Show Delivery of Physical Metal to the Customer or the Customer’s Depository Results within 28 Days

The U.S. Commodity Futures Trading Commission (CFTC) announced  that the U.S. District Court for the Southern District of Florida entered a Consent Order of Permanent Injunction against Defendants Worth Group Inc. (Worth) of Jupiter, Florida, and its owner and operator, Andrew Wilshire of Jupiter, Florida, and Wilshire’s sister, Eugenia Mildner also of Jupiter, Florida, who served as Worth’s sole officer and director prior to February 2012. The Order requires the three Defendants to immediately comply with the law governing their financed precious metals transactions and to pay restitution of $1,250,000. Defendants Worth and Wilshire are also required to pay a civil monetary penalty $1,250,000.

The Court’s Order stems from the CFTC Complaint filed on August 13, 2013, that charged Defendants with defrauding retail precious metals customers and engaging in illegal, off-exchange retail commodity transactions (see CFTC Press Release 6666-13, August 13, 2013). According to the CFTC Complaint, Worth sells physical precious metals – specifically gold, silver, platinum and palladium – to individual retail customers throughout the United States on both a financed basis (financed transactions), in which customers pay a portion of the purchase price and finance the remainder through loans from Worth, and on a fully-paid basis (fully-paid transactions), in which customers pay the full purchase price for precious metals. In all financed transactions, it is Worth’s obligation to deliver precious metals to its customers within 28 days.

For fully-paid transactions, the Complaint charged that Defendants falsely represented that Worth would purchase and store precious metals, when in fact Worth merely covered its obligations through unallocated spot forward contracts with third parties. For financed transactions, the Complaint charged Defendants with engaging in illegal and fraudulent off-exchange transactions, in that Worth failed to timely deliver precious metals for a significant percentage of financed transactions, yet charged interest and storage fees when no metal had been purchased.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), financed precious metals transactions must be conducted on an exchange, unless the entity offering the transactions – such as Worth – can establish that actual delivery of physical metal results within 28 days. As one federal court of appeals recognized in connection with another precious metals fraud case brought by the CFTC, “actual delivery” requires a transfer of “possession and control” and giving “real and immediate possession to the buyer or the buyer’s agent.” CFTC v. Hunter Wise Commodities LLC, 749 F.3d 967, 978-79 (11th Cir. 2014).

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Law Offices of Place & Hanley, LLC to discuss your legal options. The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (866) 318-4725 for a complimentary initial consultation

Categories: Commodities Fraud.