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J.P. Morgan Chase & Co. Named in Bribery Scheme

If you believe that a big, well-established firm would never cheat you, you are mistaken.

Today’s post reminds us of a fact that is all too easy to forget: there is no safety in big names. According to the SEC’s press release: (more…)

Getting Nothing for Something

This is happening all over the world right now.

Does your registered investment adviser (RIA) claim to perform some sort of continuous analysis of your account? Perhaps he or she promises that this analysis allows him or her to rebalance your account for optimum returns. If so, pay special attention to this recent case from the U.S. Securities and Exchange Commission (SEC). According to the SEC’s press release: (more…)

SEC Charges Stockbroker with Defrauding a 9/11 Widow

Not every broker is willing to mistreat his or her customers to generate those commissions, but every broker lives in a pressure cooker environment with constant temptation toward customer abuse.

We can only imagine the initial meeting at which James J. Konaxis, a stockbroker at Sentinel Securities, Inc. in Massachusetts, promised the 9/11 widow that he would safeguard the money she received from the September 11 Victims Compensation Fund.  She must have been so relieved to know that someone as seemingly trustworthy as Konaxis would be watching out for her.  The U.S. Securities and Exchange Commission (SEC) believes that, whatever Konaxis promised the widow, he used her money to enrich himself.  The SEC has charged Konaxis with fraud.  According to the SEC’s press release: (more…)

CFTC Halts Allegedly Fraudulent Commodities Pool

The U.S. Commodity Futures Trading Commission (CFTC) is on the investment cop squad which halts ongoing scams and brings investment fraudsters to justice.

Most of our posts involve cases commenced by the U.S. Securities and Exchange Commission (SEC), state securities regulators, and federal prosecutors.  But not every investment fraud involves what the law defines as a “security.”  Oftentimes, Ponzi schemes spring from commodities investments.  The U.S. Commodity Futures Trading Commission (CFTC) is on the investment cop squad which halts ongoing scams and brings investment fraudsters to justice.  As an example of the importance of the CFTC’s role comes word that the CFTC has shut down what it believes to be an ongoing Ponzi scheme in Michigan.  According to the CFTC’s press release:

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‘Belgian Royalty’ in the News Again

Hedge funds are, therefore, the perfect vehicle for fraud.

We posted on the strange case of Guy Albert de Chimay in June 2010.  Chimay, who claimed to be a direct descendent of Belgian royalty, allegedly defrauded several investors out of more than $6 million through a scam centered on a supposed bridge loan facility.  Chimay allegedly gathered investor funds through investments in his hedge fund, New York-based Chimay Capital Management, Inc.  According to a recent story in HedgeCo.net: (more…)

How Not to Break into the Movie Business

Thousands of investors will invest in bogus movie production companies this year. It is a segment of the investor fraud market that never slumps.

Thousands of investors will invest in bogus movie production companies this year.  It is a segment of the investor fraud market that never slumps. We Americans love our movies and our movie stars.  The U.S. Securities and Exchange Commission (SEC) has filed an enforcement action that highlights our susceptibility to investments having anything to do with the movies:  According to the SEC: (more…)

Former Montana Stockbroker Pleads Guilty to Ponzi Scheme Charges

The FBI reports that Americans lose $40 billion every year to investment fraud. But that figure will not motivate anyone to act. It is a sterile number that does not communicate the humiliation, misplaced guilt, and real world consequences to the victims of investment fraud.

Angela Brandt of the Helena Independent Record has been following the story of Arthur Leroy Heffelfinger (Heffelfinger) a former stockbroker with KMS Financial Services Inc. (KMS).  Last week Brandt reported that Heffelfinger has pled guilty to two felony charges arising from the eight-year, $2 million Ponzi scheme he ran from his KMS office.  In her story about the guilty plea Brandt writes: (more…)

The Danger in the SEC’s Most Recent Affinity Fraud Case

If the SEC’s charges against the defendants in this case are true, the SEC has shut down an amateur scam artist, a bungler so inartful that he would be denied membership in any club of truly professional con men.

Last week the U.S. Securities and Exchange Commission charged four individuals and five companies with operating three related Ponzi schemes that targeted the Mormon community.  The SEC alleges that: (more…)

SEC Puts a Stop to Alleged Fraud in Orange County

According to the SEC, Nickles hit the trifecta of securities fraud misrepresentations, telling investors not only that he would invest in safe securities, but also that he was registered with a broker-dealer, and that he was a Certified Financial Planner, none of which was true.

The U.S. Securities and Exchange Commission (“SEC”) has shut down what it alleges to be a $3 million financial fraud in Orange County, California.  Specifically, the SEC alleges that Richard H. Nickles, through his three companies, Innovative Advisory Services, Inc., Innovative Advisory Services LLC, and Island Trader LLC, defrauded investors of $3 million through the sale of purported insured or U.S. Government guaranteed securities.  According to the SEC, Nickles did not invest the money as promised.   (more…)

SEC Tags Recidivist Fraudsters

The case against the Levines, who were enjoined from further securities law violations in 2007, highlights how unwise it is for investors to rely solely upon regulators like the SEC for protection from scam artists.

In January 2008, we posted about the U.S. Securities and Exchange Commission’s (“SEC”) action against recidivist violators Gerald H. and Marie A. Levine (the Levines).  Their latest scam involved selling shares in penny stock companies by misrepresenting the businesses and their alleged success.  The companies involved were Avitech LifeSciences, Inc., Biomaxx Systems, Inc., Evolution Global Capital Partners, Inc., Green Machine Development Corp., and Xiiva Holdings, Inc.  The SEC announced last week that the court has entered final judgment against the Levines.

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SEC Tags Private Lending Program as a Ponzi Scheme

Before he was King of Israel, David was a shepherd. He protected his flock from bears and wolves. Every pastor needs to remember that bears and wolves are always on the prowl. Unfortunately, some pastors invite them into the flock. The results are always predictable and bloody.

Two months ago we posted about the dangers that pastors run when they turn from the spiritual health and security of their flock and get involved in investments that promise material wealth and security. The SEC has filed securities fraud charges against Scott D. Farah, a former treasurer of the Center Harbor Christian Church in Center Harbor, New Hampshire.  Farah is the son of the lead pastor of the church. (more…)

SEC Tags CEO for Market Manipulation

Paradigm was a penny stock. Investing in penny stocks is very risky and, yet, investors will always invest in them, hoping that they have latched onto the next Apple or Microsoft. Scam artists know about this hope.

The U.S. Securities and Exchange Commission (“SEC”) has charged Daniel O’Riordan, former president of Paradigm Tactical Products, Inc. (“Paradigm) with securities fraud.  Specifically, the SEC claims that O’Riordan, who is not contesting the SEC’s allegations and is facing criminal prosecution, back-dated stock certificates and prepared a list of phony supposed owners of Paradigm shares in furtherance of a scam by which the founder of the company pumped up the price of the stock through phony press releases, then sold his shares to unsuspecting investors.  The list of investors was meant to conceal the fact that Paradigm’s founder held those shares.  Unfortunately for O’Riordan and Paradigm’s founder, one of those people was dead. (more…)

SEC Charges Scottsdale Adviser with $10.2 Million Fraud

There is no honor among thieves. Smaller scam artists often lose investor money to other scam artists. The U.S. Securities and Exchange Commission (“SEC”) has charged a Scottsdale, Arizona investment adviser, and its president, with losing $10.2 million in client money to a European scam.

There is no honor among thieves.  Smaller scam artists often lose investor money to other scam artists.  The U.S. Securities and Exchange Commission (“SEC”) has charged a Scottsdale, Arizona investment adviser, and its president, with defrauding clients out of $10.2 million then losing it to a European scam.  According to the SEC, Kevin H. Blood, while serving as president and CEO of Capital Wealth Management (“CWM”), convinced 20 of his investment advisory clients to invest in a hedge fund that he created called ABC-CWM, Inc.  The SEC claims that Blood told his clients that any investment the hedge fund made would be backed by a bank guarantee or other form of collateral and that the investors’ principal would never be at risk.  According to the SEC: (more…)

A Russian Wake Up Call

The Commission’s complaint alleges that BroCo Investments, Inc., its president Valery Maltsev, and/or individuals acting in concert with them hijacked the online brokerage accounts of unwitting investors using stolen usernames and passwords and subsequently placed unauthorized trades through the compromised accounts to manipulate the markets of at least thirty-eight issuers between August 2009 and December 2009.

The U.S. Securities and Exchange Commission (“SEC”) has filed an emergency enforcement action against a Russian company and its president, charging them with hijacking investor brokerage accounts for use in a market manipulation scheme.  The SEC’s press release described the alleged scam: (more…)

SEC Halts Alleged Ponzi Scheme Targeting Retired Bus Drivers

SEC Halts Alleged Ponzi Scheme Targeting Retired Bus Drivers

The U.S. Securities and Exchange Commission (“SEC”) has taken emergency action to shut down another alleged Ponzi scheme, this one targeting retired bus drivers in the Los Angeles area.  According to the SEC, “Thomas L. Mitchell, (“Mitchell”), through his investment advisory firm Mitchell, Porter & Williams, Inc. (“MPW”), operated two entities, the Adivanala AA Investment Trust (the “AAA Trust”) and AB3, Inc., (“AB3″), which collectively raised at least $14.7 million from 82 MPW clients nationwide.”  The SEC’s complaint state that: (more…)

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