Articles Posted in Ponzi Schemes

Robert Wayne Pearce, P.A. is investigating and representing investors against brokerage firms and financial advisors who offered and sold securities issued by affiliates of GPB Capital.  GPB Capital Holdings, based out of New York, organized and manages the following nine private placements: GPB Automotive Portfolio, LP; GPB Cold Storage LP; GPB Holdings, LP;  GPB Holdings II, LP; GPB Holdings III, LP; GPB Holdings Qualified, LP; GPB NYC Development, LP;  and GPB Waste Management Fund, LP.

GPB Capital’s two most significant investment funds are GPB Holdings II and GPB Automotive Portfolio.  These two funds have collectively paid brokers $100 million in commissions at a rate of 7.9%!  Over the last year, it has been the subject of a series of federal, state, and self-regulatory agency investigations and other bad news.  For example, in September 2018, Massachusetts Secretary of the Commonwealth, William Galvin, announced an investigation into 63 broker-dealer firms that sold private placements sponsored by GPB Capital Holdings. More recently, in July 2019, David Rosenberg, a former business partner and chief executive of Prime Automotive Group, filed a lawsuit against GPB Capital Holdings, alleging severe financial misconduct. According to a Boston Globe article, Rosenberg allegedly accused GPB Capital Holdings of running a Ponzi-like scheme, in which it used investor money to prop up the performance of the auto dealerships it owns, as well as to finance payments to other investors. Continue Reading

Robert Wayne Pearce, P.A. is investigating and representing investors against brokerage firms and financial advisors who offered and sold securities issued by affiliates of EquiAlt, LLC.  EquiAlt is a private real estate company which organized at least four private placements: EquiAlt Fund, LLC; EquiAlt Fund II, LLC; EquiAlt Fund III, LLC; and EA Sip, LLC (collectively referred to as the EquiAlt Funds).  According to a recent SEC Complaint, EquiAlt CEO Brian Davison and Managing Director Barry Rybicki offered and sold $170 million of unregistered debentures issued by the EquiAlt Funds to over 1,100 investors across the United States.

The SEC Complaint alleged that Brian Davison, Barry Rybicki, and others misrepresented the unregistered debentures as “safe,” “low risk,” and “conservative.”  Also, while investors were promised “that substantially all of their money would be used to purchase real estate in distressed markets in the United States and their investments would yield generous returns … EquiAlt, Davison, and Rybicki misappropriated millions in investor funds for their own personal use and benefit.”  According to the SEC Complaint, the revenues generated by the EquiAlt Funds became insufficient to pay the interest owed to investors.  Because of this insufficiency, the SEC alleged the Defendants resorted to fraud (a Ponzi scheme), using new money from investors to pay the returns promised to existing investors.

While many of the sales were solicited by unregistered EquiAlt salespersons, there were reportedly many sales by small offices of registered salespersons associated with large independent FINRA-registered brokerage and insurance firms in Arizona, California, Nevada, and many other states nationwide. Continue Reading

Stuart Graham Dickinson, of Highland Park, Texas, was barred by the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) in a default decision made by FINRA’s Office of Hearing Officers for allegedly selling more than $1 million of limited partnership interests in a company supposedly acquiring and operating ATM machines which caused his investor customers to lose their entire investments.

FINRA alleged that while associated with WFG Investments, Inc., Stuart Dickinson recommended and sold limited partnership interests in ATM Alliance, LP to seven customers without conducting proper and reasonable due diligence on the company.  FINRA alleges further that Mr. Dickinson failed to detect numerous red flag warnings that ATM Alliance was a fraudulent Ponzi scheme.  The seven investors Mr. Dickinson sold the ATM Alliance limited partnership interests to suffered a total loss of their investments.  Mr. Dickinson was barred from association with any FINRA member in any capacity and required to pay $924,000 plus interest in restitution to customers. Continue Reading

1st Discount Brokerage, Inc., of Lake Worth, Florida, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for failing to supervise the sales of non-traditional exchange-traded funds (ETFs).  1st Discount Brokerage was subject to similar FINRA disciplinary actions in 2012 and 2015 for the firm’s failure to supervise a registered representative who operated a Ponzi scheme and for failure to supervise its compliance with Section 5 of the Securities Act of 1933, respectively.

Registered with FINRA since 1995, 1st Discount Brokerage currently has approximately 27 registered representatives and 20 branch offices.  FINRA found that 1st Discount Brokerage failed to establish, maintain, and enforce a supervisory system regarding non-traditional ETFs.  Further, FINRA found that 1st Discount Brokerage failed to provide its registered representatives with adequate training and guidance on suitability considerations for these complex, speculative investment products.  Continue Reading

The Securities and Exchange Commission (SEC) has filed a Complaint against Jaswant “Jason” Gill and Javier Rios, both California residents, and their company, JSG Capital Investments, with operating a classic Ponzi scheme aimed at middle-class investors with promises of exclusive investment opportunities and guaranteed annual returns of up to 60%, according to the SEC’s press release.

The SEC alleges that Mr. Gill and Mr. Rios, through their company JSG Capital Investments, raised approximately $10 million by catering to average retail investors and promising exorbitant returns by investing in hot pre-IPO stocks of well-known companies like Uber and Airbnb.  According to the SEC Complaint, Mr. Gill and Mr. Rios used most of the investors’ funds to pay returns to earlier investors, in classic Ponzi scheme fashion.  Further, the Complaint alleges that Mr. Gill and Mr. Rios personally pocketed at least $2.8 million of investors’ funds for their personal use, including excursions to Las Vegas casinos, gentlemen’s clubs, and professional sporting events. Continue Reading

James Johnson, a former broker at the Waltham Massachusetts-based Commonwealth Financial Network, submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the described sanction and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that he made negligent misrepresentations and omissions regarding a securities investment.

FINRA found that James Michael Johnson, of Richmond Virginia, discussed with his member firm customers a purchase of a 10% interest in West Virginia Farm Properties, LLC, a company formed to develop rural land into a residential neighborhood in West Virginia. Mr. Johnson misrepresented to the customers that all development costs had been covered; that the infrastructure for building the homes was already in place; that the houses were ready to be built on the property; and that the customers’ investment would allow the company to begin building homes immediately. Continue Reading

The Securities and Exchange Commission (SEC) has filed a Complaint against Bobby M. Collins, a Wichita Falls, Texas resident. The SEC Complaint alleges that Mr. Collins raised nearly $4.6 million from at least 36 investors, most of whom were over the age of 65, to invest in what was a classic Ponzi scheme orchestrated through his unincorporated retirement planning business, Collins Insurance Companies a/k/a BMC Retirement Planning.

The SEC alleges that Bobby Collins lured investors across Texas and Oklahoma by offering high-yield, unsecured promissory notes promising returns typically of 25% over a 12, 18, or 24-month term. Mr. Collins also allegedly enlisted the assistance of an Oklahoma stockbroker to find additional investors, providing hundreds of thousands of dollars in additional investor funds in exchange for over $100,000 in referral fees. Continue Reading

The U.S. Commodity Futures Trading Commission (CFTC) has obtained a Consent Order against James Harvey Mason of Graham, North Carolina. The CFTC found that Mr. Mason was never registered with the CFTC in any capacity. According the CFTC, the consent order against Mr. Mason imposes a $1.67 million civil monetary penalty and restitution of $3.88 million in relevance to off-exchange foreign currency commodity pool fraud along with a permanent trading and registration ban.

The CFTC alleged that around July 2010, Mr. Mason fraudulently solicited, accepted and pooled approximately $5,300,000 from about 500 individuals. According to the CFTC, Mr. Mason only used a portion of the funds to trade off-exchange foreign contracts in two commodity pools he formed; the JHM Forex Only Pool and Forex Trading at Home. He allegedly deposited investor funds in bank accounts from when he allegedly misappropriated approximately $780,000 and made payments as part of a “Ponzi sheme.” A “Ponzi scheme” is an unsustainable fraud pyramid that inevitably ends in ruin. Schemers use money raised from latter investors to pay an earlier investor’s returns. Ponzi schemes invariably fall apart when markets deteriorate or when the schemer is unable to raise more cash. Continue Reading

Former Merrill Lynch and Raymond James stock broker, Sunil Sharma, plead guilty to wire fraud charges in Federal court last week. According to the U.S. Attorney Office (“USAO”), Mr. Sharma admitted that he stole $6 million from investors by misrepresenting that he was making conservative investments when he actually was pursuing a risky day trading strategy. Apparently, Mr. Sharma was not a successful day trader and eventually his so called conservative investment venture turned into a massive Ponzi scheme.

A “Ponzi scheme,” is an unsustainable fraud pyramid that inevitably ends in ruin. Schemers use money raised from latter investors to pay an earlier investor’s returns. Ponzi schemes invariably fall apart when markets deteriorate or when the schemer is unable to raise more cash. Continue Reading

The Securities and Exchange Commission (SEC) has filed a suit against Patrick Churchville, and his firm ClearPath Wealth Management (“ClearPath Wealth”) misappropriated and misused his investors’ cash and assets through a fraudulent scheme involving theft that was covered up by false accounting entries, shadow accounts, and misrepresentations to his investors, financial institutions, to third-party administrators, and to ClearPath Wealth’s auditors and accountants.

According to the SEC, Mr. Churchville and his firm, ClearPath Wealth, caused over $11 million in losses to investors of the funds they advised and controlled. The SEC alleged that the defendants misallocated and misappropriated investor assets as part of a Ponzi-like scheme. According to the SEC, the defendants took monies that were due to be distributed to particular investors to pay for new investments to fund distributions to unrelated investors and themselves. The SEC alleged that Mr. Churchville’s home overlooking Narragansett Bay was bought with approximately $2.5 million stolen from investors. Continue Reading