FINRA has filed a complaint against a former UBS and Morgan Stanley financial advisor named John Waszolek. The basis of the complaint is FINRA's belief that Waszolek took advantage of an elderly client, with an Alzheimer's diagnosis, by having the client change her estate planning documents to include him as a beneficiary or recipient of $1.8 million. According to FINRA's complaint, Waszolek later admitted that his elderly client was not competent to change her estate planning documents.
Senator Jack Reed, D-R.I., has introduced a new bill in response to the Supreme Court's decision in Gabelli v. SEC. The bill proposes that the statute of limitations applicable to Securities and Exchange Commission (SEC) enforcement actions be lengthened from five years to ten years. In Gabelli v. SEC, the financial advisor avoided liability because the SEC did not file a case in a timely matter. Sen. Reed wants to extend the statute of limitations to help protect investors and to provide regulators, such as the SEC, with the adequate resources to fight investment fraud.
Sean Meadows of Meadows Financial Group was sentenced to 25 years in prison after allegedly orchestrating a Ponzi scheme that cost 55 clients $13 million. Meadows promised clients that they would receive a 10% annual return on investments allegedly made in stocks and bonds. The money instead went to Meadows to pay both business and personal expenses. Prosecutors believe that at least $100,000 went to adult entertainment establishments. Prosecutors asked for a 30 year sentence because of the manner in which Meadows preyed on his clients. As part of the judgement, Meadows was ordered to surrender any real or personal property that had any ties to the Ponzi scheme. This included watches, real estate and a boat.
The Securities and Exchange Commission (SEC) filed a complaint against Hans Peter Black. The founder of Interinvest Corporation is accused of defrauding investors and inflicting damages up to $12 million. The SEC believes that Black failed to disclose that he sat on the board of four penny stock companies in which he advised his client to invest. The SEC estimates that of the $ 12 million of the $17 million invested in those penny stocks was lost. One of the victimized clients is a church in New Hampshire.
Financial planner and vice president of Capital Financial Planning, LLC, Frederick Monroe, was arrested for allegedly swindling clients out of $1.26 million. New York State Attorney General Eric Schneiderman believes that Monroe had been operating a Ponzi scheme since 2008. Monroe had clients issue checks to him, personally, which he then deposited into his own personal checking account. Monroe is facing multiple felony charges including scheme to defraud, grand larceny, money laundering, and securities fraud. Monroe faces 25 years in prison and was sent to jail after failing to comply with his bail requirements.
The longest running arbitration case in the past two decades has finally been ruled on after five years. After a 95-day hearing, a Financial Industry Regulatory Authority (FINRA) panel awarded the Claimants $16.6 million based upon evidence that BNP Paribas Securities Corp. unsuitably concentrated their savings in leveraged option securities. Claimants alleged that the company's own policies prohibited the sale of leveraged options securities to U.S. customers. The $16.6 million included restitution, damages, and attorneys' fees.
Two fraud cases have resulted in a $1 million fine and a permanent bar for the principal of Sage Advisory Group, Benjamin Lee Grant. According to the SEC, when Grant first opened Sage Advisory Group he falsely informed clients that utilizing the services of his new firm would result in lower costs and fees than those charged by his prior firm. Additionally, Mr. Grant failed to disclose that his father, an advisor serving clients with Sage Advisory Group, was permanently bared from the industry in 1988.
A former A.G. Edwards, Merrill Lynch, and Raymond James affiliated broker is facing up to twenty years in prison after allegedly running a $6 million Ponzi scheme. Sunil Sharma allegedly raised $8.36 million from investors over a six year period for a day-trading strategy involving high risk option securities. Unfortunately for Sharma, according to federal prosecutors, the strategy did not pay off and he acquired new investors to repay the old investors. Sharma pleaded guilty and is scheduled to be sentence in August. Sharma faces twenty years in prison.
The Securities and Exchange Commission (SEC) has charged William Quigley, a former chief compliance officer of Westbury, New York based brokerage firm Trident Partners, Ltd, with fraud. According to the SEC, Quigley solicited foreign investors to invest in well-know companies along with a few start-ups and then used the money for his own personal use. Over the course of a decade, Quigley allegedly siphoned $800,000 of investors' money into his personal accounts by sending investors false account statements. Quigley was indicted on charges of wire fraud and money laundering. He faces up to twenty years in prison.
Former Frederick attorney, Richard A. Brennan, is now facing jail time after pleading guilty to mail fraud and tax charges. Brennan first opened his practice in 2006 with the main focus of providing clients with debt-settlement services. Brennan allegedly misappropriated clients' funds intended to pay off their debts, and used the money for his own needs. Over a three year period this caused his clients to lose about $2.9 million. In 2007, the Maryland Attorney General's Consumer Protection Division investigated him for these allegations. The Attorney General and Brennan came to a settlement in which he would pay $200,000 in fines and costs and repay clients harmed by his scheme. Unfortunately, Brennan never followed the terms of the settlement and never returned any of the money to his clients.