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Baltimore Securities & Estate Planning Law Blog

Broker-Dealer to Pro Athletes Barred and Fined Nearly $14 million

Success Trade Securities, Inc. and its founder, Fuad Ahmed, were barred from the securities industry by a Financial Industry Regulatory Authority (FINRA) as a result of allegedly defrauding fifty-nine clients, many of which were pro athletes. FINRA also ordered the firm and Ahmed to pay $13.7 million in restitution to the investors. FINRA initiated its investigation in April 2013 when it became suspicious that Ahmed and his firm were operating a Ponzi scheme. Their suspicions caused them to file a complaint and a temporary cease and desist order to which Ahmed and the firm consented.

Former Raymond James Advisor Barred

The Financial Industry Regulatory Authority (FINRA) barred Claus Foerster, a former Raymond James advisor, for swindling about $3 million from clients through a Ponzi scheme. Foerster allegedly transferred funds from clients' brokerage accounts into a phantom income fund called "S.G. Investments." In reality, "S.G. Investments" was actually a bank account under Foerster's control which he used to pay personal expenses. FINRA believes that the scam began in 2000 and lasted up until June 2014. Foerster provided his clients with fabricated account statements and even paid monthly dividend payments on the fictitious fund to two of the clients.

Tom Clancy's Estate Attorney Faces Suit for 6 Million Dollar Mistake

clancy.jpgAccording to the Daily Record, Tom Clancy's widow, Alexandra Llewellyn Clancy, is attempting to remove J.W. Thompson Webb, Clancy's estate attorney, as personal representative of Clancy's estate. Clancy's estate is valued at a $83 million, a majority of which is Clancy's 12-percent-stake in the Baltimore Orioles. Mrs. Clancy claims that Webb made mistakes in preparing Clancy's will and estate plan which have cost the estate approximately $6 million in taxes. However, under Maryland law, a beneficiary of an estate cannot sue the attorney who drafted the will. The suit must be brought by the personal representative of the estate. Since Webb is both the drafter of the will at issue and the personal representative, Mrs. Clancy must first have Webb removed as personal representative in order to sue him on behalf of her late husband's estate.

SignalPoint Asset Management Fined $215,000 for Failure to Disclose Conflicts

The Securities and Exchange Commission (SEC) fined SignalPoint Asset Management after it allegedly failed to disclose conflicts of interest to their clients. The SEC claimed that SignalPoint misrepresented the source of funds used to start the business. The three principals of the company, Jonathan Timson, Dennis Walker, and John Handy Jr., as well as Comptroller Michael Orzel, all consented to the SEC fine without admitting or denying the allegations. The four men were fined a total of $215,000.

Cabot Investment Properties Lost $5 million of Investors Retirement Savings in TICs

Cabot Investment Properties and its principals, Carlton Cabot and Timothy Kroll, were charged with real estate fraud after allegedly loosing investor money in fraudulent tenancy-in-common (TIC) deals. The investors were looking for retirement income and invested over five million dollars in eight different fraudulent TICs, causing them to lose their money. The Secretary of the Commonwealth, William Galvin, also charged the defendants with funneling $9 million of investor funds into their own personal accounts, which he believes to have funded their lavish lifestyles.

Defiant Money Manager Banned from Securities Industry

Max E. Zavanelli, a Florida based money manager, was banned from the securities industry. An administrative law judge found that the SEC presented sufficient evidence to establish that Zavanelli provided misleading information to Morningstar. Zavanelli and his firm, ZPR Investment Management Inc., were also required to pay a fine totaling $660,000. The SEC believes that Zavanelli falsely reported his firm's compliance with the Global Investment Performance Standards in newsletters and advertisements. According to an Investment News report, Zavanelli refused to take responsibility for any of the allegations and was said to be extremely defiant throughout all the proceedings.

Chicago Advisor Earns Millions from Eight Year Ponzi Scheme

Chicago advisor Neal Goyal and his investment firms Caldera Advisors, LLC and Blue Horizon Asset Management, LLC are facing fraud charges after allegedly operating a Ponzi scheme. According to the SEC, Goyal falsely told investors that all of their money would be placed into funds that were invested in stocks. Goyal provided investors with false account statements and used new investor money to pay the older investors. An Investment News article reports that Goyal had accepted $11.4 million from 35 clients. He allegedly used the money on personal items including luxury cars, two homes and his wife's business ventures.

Four DBSI Principals Found Guilty

After a forty-two day trial, four DBSI principals were found guilty of fraud by a Boise federal jury. Douglas Swenson, Mark Ellison, David Swenson, and Jeremy Swenson were convicted of multiple fraud charges. These charges stemmed from them publically relaying that DBSI was a profitable enterprise with a net worth totaling over a $100 million, but in reality DBSI was an unprofitable Ponzi scheme. All four defendants were convicted of forty-four counts of securities fraud and will be sentenced in late August.

American Pension Services Inc. Faces Fraud Charges

American Pension Services Inc. (APS) and its founder, Curtis L. DeYoung, are facing fraud charges from the Securities and Exchange Commission (SEC) for allegedly investing client funds in questionable high-risk business ventures. APS's clients are said to have lost $22 million. On April 24, 2014, US District Court Judge Robert Shelby froze both APS and DeYoung's assets and placed APS under receivership. The allegations stemmed from 2005 when DeYoung supposedly advised clients to put their money into self-directed individual retirement accounts. DeYoung maintained complete control over their money and provided clients with inaccurate statements regarding the activity in their accounts. According to an Investment News report, "Savers allegedly were told there was $45.9 million in the master trust accounts at the end of 2012, when the balance was really $23.8 million, reflecting a shortage of $22 million."

Frederick Advisor Steals $1.2 Million Through Wire Transfers

Travis Wetzel, an advisor from Frederick, Maryland was indicted on wire fraud charges last month. Wetzel was the branch operations manager at Research Financial Strategy, an advisory firm located in Rockville, Maryland. Wetzel allegedly embezzled $1,282,224 from a clients of the firm. On May 9, 2014, FINRA permanently barred Wetzel from the securities industry

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