Ponzi Scheme

Published on: November 7, 2017

Former LPL Broker Charles Fackrell Pleads Guilty to Securities Fraud Linked To Alleged Ponzi Scheme

Stealing Money 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.

Court records indicate that Mr. Fackrell successfully solicited victimized investors by making false and fraudulent representations, including that the investors’ money would be invested in, or secured by, gold and other precious metals. Further, Mr. Fackrell allegedly told investors that Robin Hood was a safe investment, paying annualized guaranteed returns of 5-7%. In actuality, however, Mr. Fackrell allegedly spent only a fraction of the investor money on such assets. Contrary to the representations made to investors, Mr. Fackrell allegedly used a great deal of the money to cover personal expenses, in addition to diverting approximately $700,000 of his victims’ money, back to other investors in classic Ponzi-style payments designed to continue the fraudulent scheme.

Mr. Fackrell entered the securities industry in 2007, when he was under the employ of Morgan Stanley. From 2010-2014, Mr. Fackrell was employed by LPL in Yadkinville, NC. Currently, FINRA BrokerCheck indicates that Mr. Fackrell has been the subject of several customer complaints, including the following four pending complaints:

Published on: October 10, 2017

Credit Nation/CN Capital Investors May Have Legal Claims

by InvestorLawyers

Investors in promissory notes of Credit Nation Capital, LLC (“CN Capital”) and affiliated companies may have viable legal claims based upon allegations in cases filed by the United States Securities and Exchange Commission (“SEC”).

Money

The SEC filed a lawsuit in 2015 alleging that CN Capital and affiliates were engaged in fraud. The companies allegedly lost massive amounts of money and stayed afloat only by raising more money from investors, according to the SEC lawsuit. According to the SEC, related entities allegedly included Credit Nation Acceptance, LLC, a Texas limited liability company in Midland, Texas; Credit Nation Auto Sales, LLC, a Georgia limited liability company in Woodstock, Georgia, American Motor Credit, LLC, a Georgia limited liability company in Woodstock, Georgia; and Spaghetti Junction, LLC, a Nevada limited liability company.

Published on: October 6, 2017

Leon Vaccarelli of Waterbury, Connecticut Charged With Running Alleged Ponzi Scheme

by InvestorLawyers

Recently, the Securities and Exchange Commission (“SEC”) initiated an action against 40-year old Leon Vaccarelli by filing a sixteen-page complaint (“SEC Complaint”) in federal court in New Haven, CT. The SEC is alleging that Mr. Vaccarelli, based in Waterbury, CT, engaged in operating a Ponzi Scheme for more than four years, during which time he allegedly misappropriated client funds. The SEC Complaint alleges that Vaccarelli diverted client money from investment accounts, as promised, and instead used the funds for such personal expenses as mortgage payments. Moreover, the SEC Complaint alleges that Mr. Vaccarelli used client funds in order to make payments to earlier investors, a hallmark sign of a Ponzi scheme.

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A review of FINRA’s BrokerCheck indicates that Leon (or Lee) William Vaccarelli (CRD# 3227636) entered the securities industry in 1999. Since that time, Mr. Vaccarelli has been affiliated with the following firms: Ameriprise Financial Services, Inc. (CRD# 6363) (1999-2007), QA3 Financial Corp. (CRD# 14754) (2007-2011), and most recently — The Investment Center (CRD# 17839) (2011-2017).

Published on: December 1, 2011

Investment Fraud: Selling Away

by InvestorLawyers

There are many types of selling away schemes, and these schemes can result in significant — and sometimes complete —investor losses. However, with the help of an investment attorney, investor losses can be recovered through securities arbitration.

Investment Fraud: Selling Away

Selling away occurs when a broker or investment adviser sells an investment to a client that is not included in the client’s account or in the investment products that are offered by the firm. These private securities often include investments in private placements, private non-traded REITs, privately-held companies, limited partnerships, real estate and promissory notes. While all of these private securities can be real investments, they are sometimes used as a means for defrauding clients.

If a broker wants to complete a private securities transaction, he or she must provide the firm with written notice that details the transaction, and the transaction must be approved by the firm. If the transaction is not approved by the firm, the broker cannot participate in any way with the transaction. If the broker does not comply with the firm’s order, or does not attempt to gain approval, “selling away” has occurred.

Published on: October 14, 2011

FINRA Decision: Merrill Lynch Fined $1 Million

by InvestorLawyers

On October 4, the Financial Industry Regulatory Authority (FINRA) announced its decision to fine Merrill Lynch a total of $1 million. In an investigation conducted under the supervision of FINRA’s Enforcement Chief Counsel, Susan Light, investigators Brian Vincent and Richard Chin found that Merrill Lynch did not have an adequate supervisory system that would monitor employee accounts and allow them to identify potential broker misconduct.

FINRA Decision: Merrill Lynch Fined $1 Million

Merrill Lynch’s supervisory system, as it was functioning before FINRA’s decision, captured employee-opened accounts automatically and a social security number was used by the system as the primary tax identification number. However, if the same SSN was not used as the primary account identification number, the system would not record the account in its database. Under this system, it was the responsibility of the employees to manually enter these accounts into the supervisory system. Therefore, if the employee failed to enter his or her account, the account was not properly monitored.

Because of the discrepancies in Merrill Lynch’s supervisory practices, there was an instance of stock broker fraud committed in San Antonio, Texas, in which an employee’s account was used. In December 2009, Bruce Hammonds was barred from the securities industry for convincing 11 individuals to invest in a Ponzi scheme. The scheme lasted 10 months, during which Merrill Lynch’s failure to supervise the account it had approved allowed him to collect investments totaling over $1 million from the 11 investors. In addition to the Ponzi scheme, the lacking supervisory system failed to properly monitor 40,000 employee/employee-interested accounts between January 2006 and June 2010.