Investor Lawyers Blog
The President of a California group of companies known as Woodbridge that has previously been accused of selling unregistered securities by state securities regulators, Robert Shapiro, has reportedly invoked his Fifth Amendment right against self-incrimination in a letter to the Securities and Exchange Commission (SEC). A March 27, 2017 letter to the SEC from Shapiro’s attorney Ryan O’Quinn, Esq., reportedly stated that “Upon consideration of the SEC’s investigative subpoenas and a review with counsel of the individual rights afforded by the United States Constitution, Mr. Shapiro will rely on his constitutional privilege to refuse to be a witness against himself.”
Woodbridge Wealth, a California-based firm, is a successor company to Woodbridge Structured Funding, LLC, and sells structured financial products to investors, often through intermediary brokers. These sales have resulted in certain actions by state regulators. For example, in April of 2017, the Pennsylvania Bureau of Securities Compliance and Examinations entered into an agreement with Woodbridge Wealth, to settle allegations of securities industry misconduct arising out of sales of complex structured settlement products that Pennsylvania regulators alleged were unregistered securities. In another example, in May of 2016, the Financial Industry Regulatory Authority (FINRA) suspended Frank John Capuano (CRD#: 844182), a registered broker from western Massachusetts, after he was alleged to have improperly sold Woodbridge Wealth notes to investors while employed as a registered representative of Royal Alliance Associates in Holyoke, Massachusetts. Finally, in May of 2015, Massachusetts state regulators charged a non-registered individual named Charles Nilosek and his firm, Position Benefits, LLC, with fraud. These charges were brought bssed on the regulators’ allegations that the firm was marketing and selling unregistered securities to vulnerable elderly investors. These complex securities were allegedly sold to retirees as having a guaranteed return, but in fact were complex unregistered securities with no guaranteed return and the potential to create substantial principal losses.
Woodbridge, based in California, has reportedly raised over $1 billion from investors. Despite the regulatory actions, Woodbridge reportedly continues to sell securities. Some of the issuers of Woodbridge securities are the following:
Recently, the Securities and Exchange Commission (SEC) requested documents form a group of companies known as Woodbridge that has previously been accused of selling unregistered securities by state securities regulators. The SEC reportedly has now asked a Miami federal judge to enforce subpoenas against nearly 250 companies affiliated with Woodbridge as part of the SEC’s investigation into whether “the company is perpetrating a fraud on its investors.”
As part of its continued variable annuity (“VA”) abuse crackdown, the Financial Industry Regulatory Authority (“FINRA”) recently censured and fined member firm Ameritas Investment Corp. (CRD# 14869) (“Ameritas”) $180,000 for alleged lapses in the supervision of VA sales by its financial advisors. In a letter of acceptance, waiver and consent (“AWC”), FINRA has disclosed that between September 2013 and July 2015, Ameritas sold 4,075 individual VA contracts. Of these sales, Ameritas sold nearly 700 L-share contracts, totaling about 17% of its overall VA sales, or about $11 million in aggregate VA L-share sales.
On October 31, 2017, Carmel, Indiana financial advisor Thomas J. Buck, 63, was charged under federal securities laws with one count of securities fraud. The unsealed criminal charges brought in the U.S. District Court for the Southern District of Indiana allege that Mr. Buck defrauded his clients by charging excessive commissions. Mr. Buck has agreed to plead guilty to the charge.
On November 1, 2017, the Financial Industry Regulatory Authority (“FINRA”) disclosed that registered representative Masood “Mike” Husain Azad (“Mike Azad”) has been barred from the securities industry following a FINRA enforcement proceeding. Specifically, without admitting or denying FINRA’s findings, “[A]zad consented to the sanction and to the entry of findings that he failed to provide FINRA requested documents and information in connection with its investigation into allegations of misconduct by Azad while associated with his member firm… the allegations included that Azad participated in an unapproved private securities transaction by soliciting investments and/or directly investing in an electronic data security company and engaged in outside business activities involving the company….”
A private equity fund managed by firm EnerVest Ltd. focused on oil and gas investments has reportedly lost essentially all of its value. EnerVest Energy Institutional Fund XII (which closed in 2010) and EnerVest Energy Institutional Fund XIII (which closed in 2013)- both of which raised over $1 billion equity capital- appear to be affected by the loss.
On April 12, 2016, former LPL Financial LLC (“LPL”) broker Charles C. Fackrell (CRD# 5369665) appeared before U.S. Magistrate Judge David Cayer in order to plead guilty to one count of securities fraud for operating a $1.4 million Ponzi scheme. Based on documents filed with the federal court for the Western District of North Carolina, beginning around May 2012, Mr. Fackrell perpetrated a Ponzi scheme by misappropriating investor funds solicited from at least 20 victims in Wilke County, NC, and elsewhere. According to court documents, Mr. Fackrell abused his position of trust with his clients, steering them away from legitimate investments to purported investments with “Robin Hood, LLC,” “Robinhood LLC,” Robin Hood Holdings, LLC,” and “Robinhood Holdings, LLC,” as well as related entities (collectively, “Robin Hood”). These entities allegedly were controlled by Mr. Fackrell and provided him with a conduit through which to cover his own personal expenses, including hotel expenses, groceries, purchases at various retail shops, and to make large cash withdrawals.
Investors who have suffered losses in American Finance Trust, a non-traded real estate investment trust (REIT) may have arbitration claims if the REIT was recommended by a stockbroker or investment advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by a stockbroker or financial advisor. According to its website, American Finance Trust is designed to protect shareholder capital and produce stable cash distributions through the acquisition and management of diversified portfolio of commercial properties leased to investment grade tenants. The REIT reportedly invests in core retail properties such as power centers and lifestyle centers.