Total Wealth Management and its founder, Jacob Cooper, are in trouble again with the Securities and Exchange Commission (SEC) after using client funds to settle a prior case with the SEC. To help settle the original charges, the firm and Cooper allegedly misappropriated $150,000 of client funds through "administrative" fees that ranged from $3,500 to $7,500. The SEC had originally filed charges against Total Wealth Management for failing to disclose to their clients that they were receiving kickbacks from Altus Funds. The SEC is now working to freeze Total Wealth's assets and to appoint a trustee.
Raymond Schmidt, formerly with LPL, was barred by the Financial Industry Regulatory Authority (FINRA) after he borrowed about $2.25 million from his clients. Schmidt failed to disclose to LPL that he was borrowing from customers over a three year period to build a luxury rental home in Hawaii. Schmidt was also obligated to notify FINRA about the rental home because it is considered an outside business activity, but failed to do so. FINRA made no accusations that Schmidt had failed to repay the borrowed monies. However, Schmidt has one customer complaint pending for $375,000 relating to the real estate in Hawaii.
The Securities and Exchange Commission (SEC) has filed charges against Lynn Tilton and her companies, Patriarch Partners, after allegedly defrauding investors. The SEC believes Tilton and Patriarch Partners failed to disclose the poor performance of loan assets held by the firm's Zohar funds, allowing her to continue to collect fees from investors totaling nearly $200 million. The Zohar funds had raised over $2.5 billion from notes sold to investors. Tilton has denied all charges.
The Financial Industry Regulatory Authority (FINRA) has ordered Brookville Capital Partners to pay a total of $1.5 million and barred its president, Anthony Lodati, as a result of alleged fraudulent conduct. FINRA believes that Brookville, under the supervision of Lodati, deceptively offered and sold 29 clients over a million dollars worth of shares in a private placement called Wilshire Capital Partners Group LLC. FINRA claimed that Lodati was aware that Wilshire was operated by individuals with felony convictions and intentionally withheld that information from Brookville costumers.
Former Stifel broker, Lanis Dale Noble, received an unfavorable FINRA award after his former daughter-in-law accused him of churning and breaching his fiduciary duty. The panel awarded the claimant, Tracy Noble Gilbert, $1.29 million in compensatory damages and an additional $250,000 in attorneys' fees. Gilbert alleged that Noble unreasonably used margin to purchase a real estate trust along with multiple variable annuities. Noble is no longer registered with FINRA.
Former NFL player for the Green Bay Packers, Bruce Wilkerson, recently received a $2 million arbitration award against Resource Horizons Group. Unfortunately for Mr. Wilkerson, Resource Horizons Group is out of business and has a total of $6 million in unpaid FINRA arbitration award against the now defunct firm. Wilkerson initially lost $650,000 in a Ponzi scheme that was allegedly carried out by Robert Gist. According to an SEC complaint, Gist fabricated account statements for about 32 clients over a ten year period. To settle the allegations made by the SEC, Gist agreed to pay $5.4 million.
Newbridge Securities Corporation, a Fort Lauderdale-based broker dealer, was fined $50,000 by FINRA in January 2013 for issues dealing with improper and undisclosed postage and handling charges to customers. These accusations led to a class action suit which resulted in Newbridge making an $850,000 payment to settle the case. This wasn't the first time Newbridge was fined by FINRA. FINRA also fined Newbridge $138,000 for violating industry rules related to the offer and sale of corporate bonds.
A class action suit against Northwestern Mutual has ended after it agreed to pay $84 million to over 30,000 customers. The past and present annuity owners claimed that Northwestern had breached the terms of their fixed and deferred annuity contracts by altering dividend calculations.
The Securities and Exchange Commission (SEC) has sued a broker from Palo Alto, California for allegedly operating a stock scam that defrauded investors out of $900,000. According to the SEC, Vinay Kumar Nevatia sold shares of CSS Corp. Technologies (Mauritius) Limited to his clients in 2008 and then he allegedly, without the investors' knowledge, resold the shares to new investors. Kumar was able to conceal his wrong doing by falsely telling the transfer agent for CSS that the original stock certificates had been lost and new ones needed to be issued. According to the Complaint, before the investors could figure out the scam, Kumar "...absconded with the original proceeds." In the fall of 2013, Kumar's brokerage firm, KBR Capital Markets, closed due to its failure to satisfy FINRA's financial requirements.
Jeffrey M. Knutsen, a financial advisor from Bellingham, Washington, was sentenced to 51 months in prison with three years of supervised release after accusations of wire fraud. Along with prison time, U.S. District Judge James L. Robart also ordered Knutsen to pay $251,892 in restitution to the clients from whom he embezzled money. Knutsen owned and operated his own firm, Bellwether Financial Services, which he told clients was switching to an online approach sometime after 2005. In 2005, FINRA barred him for allegedly converting $89,973.16 of client funds to his own use. Knutsen did not disclose to his clients that he had been barred from the securities industry. He continued to mislead investors by trading through online sites such as E*Trade and TD Ameritrade. Knutsen set up accounts in his clients' names and had complete control over the account and made sure each account would allow him check writing privileges. Over a period of almost eight years, without his clients' knowledge or consent, he wrote more than 200 checks on their accounts.