Investors May Be Able to Recover Losses on Diversified Lending Group Notes

Diversified Lending Group (DLG) was a California corporation purported to be in the business of acquiring and operating income producing properties. In 2009, the Securities & Exchange Commission filed suit alleging that DLG was a $216 million dollar securities fraud and froze the assets of the company and appointed a receiver.

DLG offered promissory notes in the form of one or five year Secured Investment Notes that guaranteed rates of return of 9% or 12%. Applied Equities, Inc. a subsidiary of DLG functioned as DLG’s investment servicing division and contracted with other entities including stockbrokers and broker-dealers who sold the notes nationwide.

Bruce Fred Friedman died in French custody in March 2012 while awaiting extradition to Los Angeles on charges related to the scam.

In February 2013, an Order Accepting Offer of Settlement was entered in the FINRA Department of Enforcement complaint against Forrest Nolan Jackson, who at the time in question was a broker with PlanMember Securities Corporation, and who, according to the complaint, had sold $60 million of the notes. Jackson sold the notes through an entity called Your Platinum Distributors and without the approval of his employer PlanMember Securities. Jackson was barred from associating with any FINRA member in any capacity. FINRA records reveal that Jackson worked for the following firms during the time he was registered:

  • Grant Williams L.P.                         8/2009-1/2011
  • Longview Financial Group              5/2009-7/2009
  • Ascher/Decision Services                10/2008-3/2009
  • PlanMember Securities                     2/2007-7/2008
  • Quest Capital Stratigies                    9/2005-8/2006
  • Jackson National Life Distributors   7/2000-10/2003

If you purchased any of the Diversified Lending Group notes from a registered broker dealer, you may be able to recover all or a part of your losses through FINRA arbitration. Call for a no charge consultation with an experienced securities fraud attorney.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

Thomas Redmond-Former Capital Financial Services/Next Financial Broker Charged with Fraud

FINRA records indicate that Thomas Heflin Redmond, Jr. was registered with these firms during the time frames indicated:

  • Next Financial Group, Inc.                                         12/2007-10/2009
  • Capital Financial Services, Inc.                                   8/2005-11/2007
  • Empire Financial Group, Inc.                                      11/2003-8/2005
  • Freedom Financial, inc.                                                2/2002-11/2003
  • SII Investments, Inc.                                                     3/2001-3/2002

In 2011, FINRA revoked Redmond’s registration for making an unsuitable investment to a 60 year old widow, for whom he invested 47.5% of her liquid net worth in high risk investments including $100,000 in an oil and gas limited partnership. Redmond forged signatures and otherwise failed to follow the instructions of the customer. To top it off, Redmond falsely told the customer that he had invested a third of his personal assets in one of the same investments, a common sales pitch utilized by unscrupulous
investors to gain investor confidence.

On March 1 2013, Redmond was charged with fraud in Indiana for
defrauding 10 elderly investors out of more than $580,000. According to Marion County Prosecutor Terry Curry:

“This case is particularly devastating as it involves the most trusting
of victims: elderly widows who knew Redmond through church and a pair of missionaries who spent their life’s work overseas counseling survivors of Auschwitz,” said Secretary Lawson. “These Hoosiers, who thought they were making sound investments, have lost their life savings.”

Redmond admitted that he began stealing from clients in 2004 by feigning a shared Christian belief to secure the trust and confidence of his victims. To perpetuate this ponzi scheme, Redmond prepared and sent fake statements to the victims. To read the press release from Indiana authorities see this.

More information regarding the regulatory and disciplinary history of Redmond, Next Financial and Capital Financial Services can be found by visiting FINRA’s BrokerCheck website.

Brokerage firms have a duty to supervise the brokers that work for them to assure that they make suitable and legitimate investment recommendations. Investors who have suffered losses due to the negligence or fraud of their broker may be able to recover all or a part of their losses through FINRA arbitration.

If you have questions  about the way your brokerage account has been handled, call for a no charge consultation with an experienced
securities fraud attorney.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

Cetera To Buy Walnut Street/Tower Square Securities

Cetera Financial Group announced April 5, 2013, that they are purchasing  two independent broker dealers, Tower Square Securities and Walnut Street Securities, from MetLife Inc. Cetera Financial Group currently includes:

  • Cetera Advisors Network (formerly Financial Network Investment Corp.)
  • Cetera Financial Institutions (formerly PrimeVest Financial Services)
  • Cetera Financial Specialists (formerly Genworth Financial)

The acquisition of Walnut Street and Tower Square will bring another 800 financial advisors to Cetera , for a total of over 7000, and is a continuation of Cetera’s expansion efforts. Cetera Financial Group will have over $130 billion in client assets following the merger of Walnut Street and Tower Square into Cetera Advisors Network.

Cetera began its independent broker dealer venture in 2010 by purchasing several broker dealers from ING, the Dutch insurer and last year acquired Genworth Financial Investment Services, now called Cetera Financial Specialists.

MetLife will still be in the independent broker-dealer industry with its two other broker-dealers MetLife Securities, Inc. and New England Securities, Inc. 

Rex Securities Law is a securities fraud , stockbroker negligence law firm that has been helping individual investors recover investment losses for 25 years. If you think you are the victim of securities fraud or if you believe you were sold an unsuitable investment, contact us for a no charge consultation to discuss your legal rights. You may be able to recover some or all of your losses through FINRA arbitration. See this for more information on FINRA arbitration.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

Why Are Brokerage Firms Suing Their Former Stock Brokers ?

Many investors may not be aware of the fact that in the brokerage industry when a stock broker moves from one broker dealer to another, unless he is a poor producer or has been asked to leave, it is common practice for the new brokerage firm to pay the stock broker a “signing bonus” if he is able to convince his customers to follow him.

The amount of this signing bonus is based on the production (commissions, margin interest credits, etc) history of the broker and can be in the hundreds of thousands of dollars (or millions for the really big producer). This is referred to as the value of “his book”.

The firm disguises the bonus to your broker as a forgivable loan. If the broker generates the revenue requirements in the forgivable loan agreement annually, then a certain amount of the loan is forgiven. It does not take much contemplation of this arrangement to arrive at the conclusion that there is an inherent conflict of interest that works contrary to the best interest of you, the broker’s customer.

For example, if the year is coming to an end and the broker has not yet generated sufficient commission income from his customers who followed him to the new firm to qualify for having a portion of the loan forgiven, he is faced with two choices:

  1. Figure a way to generate activity in the customer accounts to meet the revenue goal and have a portion of the loan forgiven; or
  2. Face having to repay that portion of the bonus to the firm.

My experience with both the industry and human nature leads me to believe option 1 will be the path taken in most cases. We often see in our cases mutual fund churning, equity churning and the recommendation of unsuitable investments including private placements, non traded REITs , oil & gas investments and limited partnerships that have likely been generated, not to benefit the investor, but rather to generate commissions for the broker and his firm.

What happens when a broker who has received a signing bonus leaves his firm for a new firm with the promissory note unpaid? Prudent business practice would suggest that the broker would pay off the note to the firm he is departing. In real life, many brokers leave for the new firm and are sued in FINRA arbitration by the old firm for the outstanding balance. Their defense is generally based upon allegations that the old firm somehow hindered their ability to conduct business.

In this week’s FINRA arbitration awards there was a spate of arbitrations by firms against their former brokers, including these:

  • Wells Fargo v Caio Dean Dunson (Case 10-2139) Dunson had signed two notes in 2005 and 2006 on which he still owed over $800,000 when he left Wells Fargo, and apparently the industry, in 2009. The FINRA arbitration panel ordered Dunson to pay Wells Fargo nearly a million dollars, plus attorney fees and costs. A review of Dunson’s CRD on the BrokerCheck site reveals that he had a number of customer complaints involving misrepresentation of variable universal life policies. Wells Fargo paid hundreds of thousands to the aggrieved investors.
  • Ameriprise v Lisa Engstrom Seran (Case 12-2563) Ameriprise requested the $75,000 note balance and interest which the arbitration panel awarded pursuant to a stipulated award between the parties. According to FINRA recoreds Seran currently is registered with Cetera Advisors, LLC.
  • Morgan Keegan v Wayne Thomas Altman (Case 11-3624) Morgan Keegan alleged failure to repay commissions related to cancelled annuity sales and to repay promissory notes executed by Altman in 2009 & 2010 and sought $115,000 plus interest on the notes and $5,100 related to commissions. The panel awarded a total of $121,000 to Morgan Keegan. According to FINRA records, Altman currently works for Ameriprise Financial Services.
  • Regal Services, Inc. v John A. Cavanaugh (Case 12-980) Regal sought the unpaid balance on a note executed by Cavanaugh in 2007. The panel awarded $71,000 plus attorney fees and costs. Cavanaugh is no longer registered according to FINRA records.

If you have losses in your brokerage account that you believe are due to the negligence or fraud of your broker or broker dealer contact us for a no charge consultation.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

MMl Investors Services & Broker Karen Michel Hit With $1.1 Million Arbitration Award

A FINRA arbitration panel ordered MML Investors Services, a MassMutual company, and Karen Michel, a former MML branch manager to pay a California investor $1.1 million for losses suffered on an unregistered investment that was part of a ponzi scheme.

Steven Corzan, the former MML broker, sold the investor $1.2 million in promissory notes issued by Diversity Lending Group, Inc. (DLG).  On the advice of the broker, the purchase was financed using equity from the family home and retirement plan funds. The investor was told that DLG, run by Bruce Friedman,  was  a real estate investment but it turned out to be a fraud that was shut down by the Securities and Exchange Commission in 2009.

Corzan was barred from the industry by FINRA earlier this year.

In addition to the $1.1 award, the panel also awarded the investor expert witness fees and other costs to the investor, however they denied the request for attorney fees.

Brokerage firms have a duty to supervise the brokers that work for them to assure that they make suitable and legitimate investment recommendations. Investors who have suffered losses due to the negligence or fraud of their broker may be able to recover all or a part of their losses through FINRA arbitration.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

 

LPL Financial Hit wtih $8.5M Investor Claim

Recent press reports that LPL Financial, already beleaguered with investigations by securities regulators from Illinois, Montana, Oregon, Pennsylvania and Massachusetts and an onslaught of investor suits seeking recovery of losses in non traded real estate investment trusts (REITs), faces a claim of $8.5 million for losses in a leasing investment and unsuitable trading.

The plaintiff in the action is reported to be an heiress to the Knott’s Berry Farm theme park and claims that her LPL broker Alberto Neira’s  suggestion that she  invest in Silver Oak Leasing is a fraud.

A review of Neira’s CRD on the FINRA BrokerCheck website reveals that he was permanently barred by FINRA from the industry in December 2012 for selling securities away from the firm. The report indicates he worked for LPL Financial from February 2002 until January 2011 when he was discharged for failing to disclose participation in an outside business activity and selling away in violation of firm policies.

LPL has grown very quickly since the 1989 merger of Linsco, a Boston firm, and Private Ledger of San Diego. The company was known as Linsco Private Ledger prior to going public in 2010.

They claim to have over 13,000 brokers and 6,500 offices. The operational model is much different that the conventional wire house. Offices tend to be small, sometimes just one or two brokers who are often located in rural America, creating issues related to compliance review and oversight.

The brokers are independent contractors paying their own staff and rent and get LPL business cards, email addresses and letterhead.

Although the brokers are independent contractors with regard to their relationship with LPL Financial, LPL nevertheless remains liable for their actions should an investors account be mishandled and incur unwarranted losses.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

 

Securities Regulators Issue Warning- Oil & Gas Investment Fraud

The North American Securities Administrators Association (NASAA) was formed in 1919 and is comprised of  the state securities regulators.

NASAA has issued a warning to investors regarding oil & gas scams. Here is a link to the entire article.

The SEC has also issued a warning to investors: Oil and Gas Scams: Common Red Flags and Steps You Can Take to Protect Yourself. You should read it if thinking of investing in oil and gas.

Every investor contemplating an
investment in an oil and gas limited partnership, private placement
offering, Reg D offering or other form of entity should take the time to
read the articles.

From the NASAA article, here are some of the misrepresentations investors should be aware of in the high pressured sales pitch that many promoters use when cold calling or sending unsolicited emails:

  • you will have an interest in a well that cannot miss
  • the risks are minimal
  • a geologist has given the sales person a tip
  • the salesperson has personally invested in the venture
  • the promoter has a “hit” on every well drilled so far
  • there has been a tremendous “discovery” in adjacent field
  • a large, reputable oil company is operating or planning to operate in the area
  • only a few interests remain to be sold and you should immediately send in your money in order to assure the purchase of an interest
  • this is a special private deal open only to a lucky chosen few investors

Oil & Gas private placements are extremely speculative in nature. The
risk associated with these investments is only suitable for those
individuals who understand and are financially capable of taking the
risk inherent to these products. If you were sold an oil & gas
investment based upon misrepresentations, such as the inaccurate
representation of the production of wells in the target area, or if this
type of investment is unsuitable for a person your age and profile, you
may be able to recover all or a part of your losses through FINRA
arbitration.

Please read the SEC & NASAA warnings linked above before parting with your hard earned dollars.

If you have questions about losses on oil & gas investments or other stock market losses call to speak with an experienced securities attorney.

Nationwide representation.

Rex Securities Law

561 391 1900

Investment Loss Recovery-Information on recovery of investment losses due to the negligence or fraud of stockbrokers. Nationwide representation.