Archive for March, 2009

Just As Predicted

Tuesday, March 31st, 2009

If you’ve looked into Investor’s Watchdog’s crystal ball, you’ve been expecting to hear about CD scamsSo, it should come as no surprise that the Securities and Exchange Commission (SEC) has filed an emergency action to halt an alleged on-going Ponzi scheme that has raised over $68 million through the sale of allegedly bogus certificates of deposit (CDs).  The Commission’s complaint alleges that defendants Michael J. Wise and Kristi M. Hoegel ran the scheme through several companies they controlled, including Millennium Bank of St. Vincent and the Grenadines, United Trust of Switzerland S.A., UT of S, LLC and Millennium Financial Group, U.S.  (more…)

Are the Stocks You Are Buying Registered?

Monday, March 30th, 2009

The U.S. Securities and Exchange Commission (SEC) has charged Gerald Alexander (Alexander), of Alpharetta, Georgia, with selling unregistered securities.  Specifically: (more…)

How Do You Know Your Account Statement Is Legit?

Friday, March 27th, 2009

The U.S. Securities and Exchange Commission (SEC) has charged an Illinois investment adviser with misappropriating more than $4 million in investor funds.  Specifically, the Commission charged The Nutmeg Group, LLC, and its principals Randall and David Goulding with paying the $4 million in investor funds to David Goulding, Inc., David Samuel, LLC, Financial Alchemy, LLC, Philly Financial, LLC, Samuel Wayne and Eric Irrgang.  (more…)

SEC Halts Alleged Oil and Gas Scam

Thursday, March 26th, 2009

On the February 24, 2009 episode of Consuelo Mack Wealthtrack, I talked about the proliferation of oil and gas scams.  As I expected, the SEC has found what they allege to be such a scam, and closed it down.  The SEC has charged that “Clement Ejedawe, a/k/a Clement Chad and his companies, Innova Energy LLC and Innova Leasing and Management, raised at least $1.3 million from over 30 investors by promising guaranteed returns on working interests in oil and gas leases or oil and gas drilling equipment.”  Specifically: (more…)

Here’s a New One

Wednesday, March 25th, 2009

We report on all manner of scams on this Blog, tracking the regulators good work at shutting down financial scams before they can claim more victims.  We report on insider trading cases, market manipulations, and all manner of Ponzi schemes.  Today we get to report on a fact pattern that we have not reported on before.  It arises from the SEC’s case against David “Scott” Cacchione, a former Managing Director at San Francisco-based brokerage firm Merriman Curhan Ford & Co. (”Merriman”).  According to the SEC’s complaint: (more…)

Protect Yourself

Tuesday, March 24th, 2009

Bret Grenbow, of Highlands FL, along with his business partner Robert Massimi, were charged with fraud by the Securities and Exchange Commission (SEC) in December 2005.  They were eventually sentenced to pay a total of $4.6 million to settle. Grenbow was also charged criminally, and pleaded guilty to investment adviser fraud.  He has been sentenced to four years in prison. (more…)

The Accountant

Monday, March 23rd, 2009

Last week, the U.S. Securities and Exchange Commission (SEC) charged Bernard Madoff’s accountant, David G. Friehling (Friehling) and his firm, Friehling & Horowitz, CPAs, P.C. (F&H), with securities fraud.  According to the SEC’s complaint: 

From 1991 through 2008, [Friehling and F&H] purported to audit financial statements and disclosures of Bernard L. Madoff Investment Securities LLC (BMIS). . . . In fact, according to the SEC, Friehling and F&H did not perform a meaningful audit of BMIS, and did not perform procedures to confirm that the securities BMIS purportedly held on behalf of its customers even existed.

Instead, the SEC alleges that Friehling merely pretended to conduct minimal audit procedures of certain accounts to make it seem like he was conducting an audit, and then failed to document his purported findings and conclusions as required under Generally Accepted Auditing Standards. If properly stated, those financial statements, along with BMIS related disclosures regarding reserve requirements, would have shown that BMIS owed tens of billions of dollars in additional liabilities to its customers and was therefore insolvent.

How many of Madoff’s victims took comfort in the supposedly audited financial statements from Madoff’s accountant?  How many victims of all kinds of financial frauds do likewise? 

It is not at all unusual for fraud operators to partner with accountants who are willing to certify the numbers involved.  If they can’t find an accountant willing to do so, the operator will just invent an auditor out of whole cloth.  He’ll incorporate the phony accounting firm, rent office space, and even install a cohort in the office to play the role of auditor. 

How will you know if the auditor is legitimate?  You won’t.  An investor protection company, though, has the resources to look behind the facade.  Hire professional help or risk seeing your nest egg lost to a well-disguised scam.

One Hand Washes the Other

Friday, March 20th, 2009

The U.S. Securities and Exchange Commission (”SEC”) has filed charges against two brokers and two hedge fund employees with a scheme by which the brokers bribed the hedge fund employees to direct hedge fund trades to the brokers.  Hedge funds buy so many shares at a time that the broker who makes the trade gets enormous commissions.  The SEC’s litigation release reads, in part: (more…)

Checking In On Your Broker

Thursday, March 19th, 2009

If you’re anything like the late Bruce Kramer’s clients, you began checking up on your broker after the Madoff scheme hit the news.  Just mention a multibillion dollar scam and, naturally, investors begin to panic.  But are you sure your broker told you the truth when you called with your questions? (more…)

SEC Nabs Market Manipulators

Wednesday, March 18th, 2009

The U.S. Securities and Exchange Commission has filed charges against Paul M. Gozzo and his company, PMG Capital, LLC, alleging that they manipulated the market in several micro-cap stocks.  Specifically: (more…)