The Law Planet Blog

Did you know that 30% of all scam victims are over the age of 65? That frightening statistic is a call to action for 3,000 Florida senior citizens who volunteer in the Senior vs. Crimes Project. The Project is administered by the Florida Attorney General’s office. Their mission is to assist seniors who have been victimized by scams, identity theft, and unethical businesses and individuals.

The program began in 1989 as a task force on crime against the elderly. It has grown to include 30 offices statewide. Seniors vs. Crime has been responsible for recovering over $8 million for Florida seniors who were the victims of con artists. While they do not provide legal services or legal representation, their free service is offered to assist all consumers, regardless of age.

If you feel that you or a loved one has been the victim of a scam, you can contact one of the project’s 3,000 volunteers at an office near you.

Florida Attorney General
Fraud help line: (866) 966-7226

Seniors vs. Crime,
Statewide hot-line: (800) 203-3099

Local Seniors vs. Crime Offices

Continue reading "Scammers target Seniors in fraud schemes - Seniors vs. Crimes Project - Helps seniors fight back" »

U.S. District Judge Richard Kyle sentenced Minnesota businessman Tom Petters to 50 years in prison for orchestrating a Ponzi scheme estimated at $3.7 billion. Counted among the victims of his scheme were missionaries, pastors and retirees. The sentence comes after a jury found Petters guilty on 20 counts of money laundering, wire fraud, conspiracy and mail fraud in December.

The Ponzi scheme involved the fake purchase of electronics by Petters Company Inc., which would then “resell” the supposed merchandise to discount retailers for a profit. Petters and his associates used bogus bank records and fake purchase orders to swindle investors out of $3.7 billion.

Judge Kyle stated to a packed courtroom that included Petters' relatives as well as some victims, "Mr. Petters was captain of the ship." The Judge did not believe that Petters, a former owner of Polaroid and Sun Country Airlines, was unaware of the fraud at Petters Group Worldwide.

At his sentencing hearing, Petters said, “Every day, I’m filled with pain and anguish for all the lives that have been destroyed and touched by this episode.” Petters, a successful entrepreneur and former owner of Sun County Airlines and Polaroid, apologized to his family, friends and others hurt by his actions, but never admitted guilt.

At 52 years old, Petters will likely spend the remainder of his life behind bars.

50-Year Term for Minnesota Man in $3.7 Billion Ponzi Fraud – NY Times Article

Minn.'s Petters Gets 50 Years in $3.7B Fraud Case – ABC News/Money Article

The Financial Industry Regulatory Authority (FINRA) expelled Dallas-based broker-dealer, Management, LLC, for marketing a series of fraudulent private placements offered by its affiliate, Provident Royalties, LLC, in a massive Ponzi scheme.

The recent action is the first produced by a FINRA initiative involving active examinations and investigations of broker-dealers involved in retail sales of private placement interests, as well as broker-dealers affiliated with private placement issuers. FINRA is looking at firms' compliance with suitability, supervision and advertising rules, as well as potential instances of fraud. The initiative was undertaken in response to an increase in investor complaints involving private placements and Securities and Exchange Commission actions halting sales of certain private placement offerings.

According to FINRA, Provident Asset Management misrepresented to investors that the funds raised through the offerings would be used to purchase interests in the oil and gas business. In reality, investors' funds were used by an affiliated issuer and commingled to make dividend and principal payments to other investors. To make matters worse, the firm acted as the agent in an oil and gas private placement offering but failed to establish an escrow account for investors' funds during the contingency period of the offering.

FINRA found that Provident Asset Management marketed and sold preferred stock and limited partnership interests in a series of 23 private placements offered by Provident Royalties, LLC. from September 2006 through January 2009. Provident Asset Management's only business line was acting as the wholesaling broker-dealer for the Provident Royalties' offerings, which were sold to customers through more than 50 retail broker-dealers nationwide, raising over $480 million through approximately 7,700 individual investments made by thousands of investors.

FINRA is continuing a broader investigation into broker-dealers that sold the Provident and other troubled private placement offerings.

Last week, the Massachusetts Securities Division’s Enforcement Section filed a complaint against Securities America, Inc. (Securities America) claiming that the company omitted information and mislead investors. In the complaint, Massachusetts claims that Securities America violated a state securities act in connection with the sale of millions of dollars worth of Medical Notes to investors.

According to the state of Massachusetts, Securities America sold investors roughly $697 million worth of Medical Capital notes issued by Medical Capital Holdings, Inc. (Medical Capital). Securities America offered the notes to investors in a number of private placements, meaning the securities were considered too risky to be solicited or sold to the general public. The complaint alleges that Securities America did not properly disclose the material risks associated with the notes prior to selling them to investors.

In a statement concerning the issue, Massachusetts Secretary of the Commonwealth, William Galvin, said:

“Our investigation showed that Securities America ignored their own due diligence analysts and sold these notes to unsophisticated investors without telling them the risks involved. People invested their life savings, while this dealer hid from them the truth of what they were getting into.”

In addition to allegedly misleading investors by Securities America, since August of 2008, Medical Capital has been in permanent receivership and has defaulted on every one of its outstanding note obligations. This means that approximately $1.079 billion of notes are in default, leaving millions of investors’ dollars – including the life savings of many – frozen. The civil complaint also seeks restitution for investors whose dollars are now illiquid.

From approximately 2003 to 2009, Medical Capital issued over $1.7 billion in Medical Capital notes. Acting as a placement agent between the notes and investors, Securities America handled the sale of roughly 37 percent of the total notes issued, or $697 million.
In connection with the sale of the notes in Massachusetts alone, Securities America received nearly $30 million in compensation. This does not include the untold millions of dollars worth of compensation received from countless more allegedly mislead investors in other states.

Although Massachusetts filed this complaint on behalf of investors within its state lines, this case of financial fraud affects investors throughout the United States. If you invested in Medical Capital notes using Securities America, please contact an attorney experienced in securities fraud immediately to discuss protecting your rights under the law.

Click on the following link to read the official complaint filed by the Commonwealth of Massachusetts

Click on the following link to read the Boston Herald’s article, State seeks restitution for securities of America investors.

Disbarred lawyer, Scott Rothstein admitted to masterminding a Ponzi scheme that defrauded investors of $1.2 billion. In a Ft. Lauderdale courtroom, Rothstein pleaded guilty to five federal charges, including wire fraud, money laundering, and racketeering. This scheme is the largest financial fraud case in South Florida history.

According to federal officials, the highly successful Ponzi scheme lasted roughly four years. In the process, Rothstein swindled $1.2 billion from countless investors ranging from retirees to athletes. The 47-year-old disbarred lawyer faces a sentence of up to 100 years in federal prison at his sentencing in May.

Along with his scheme came donations to state and national political parties and politicians in excess of hundreds of thousands of dollars. These contributions include $200,000 to the Florida Democratic Party, $150,000 to the Florida Republican Party, and approximately $9,600 to the U.S. Senate campaign of Florida Governor Charlie Crist. All such donations have reportedly been returned.

Federal officials indicate that Rothstein used proceeds from the scheme to buy numerous homes, cars, and other expensive items. Rothstein reportedly owned over 24 homes and other properties, nearly two (2) dozen exotic cars – including a Maserati and a Ferrari – expensive jewelry, an 87-foot yacht, and more. Thus far, authorities have reportedly seized roughly $60 million in assets from Rothstein and his estate.

See the following links below on how Investors can learn more about protecting themselves and investments from fraud.
U.S. Securities and Exchange Commission’s Investor Information Page:

Financial Industry Regulatory Authority’s Investors Page:

To read more on the Rothstein guilty plea, click on the following links:

Bloomberg News
Business Week
SouthFlorida Business Journal

Happy New Year! Today marks the first day of 2010. It marks the beginning of a fresh new start.

Please enjoy a few important highlights from the Securities and Exchange Commission:

The SEC has approved stronger safeguards to Protect Clients’ Assets Controlled by Investment Advisers
The new rules provide safeguards where there is a heightened potential for fraud or theft of client assets. The SEC’s new amended custody rule promotes independent custody and requires the use of independent public accountants as third-party monitors.

According to SEC Chairman Mary L. Schapiro, “The Madoff Ponzi scheme and other frauds have caused investors to question whether their assets are safe when they entrust them to an investment adviser. These new rules will apply additional safeguards where the safeguards are needed most — that is, where the risk of fraud is heightened by the degree of control the adviser has over the client’s assets.”

SEC Charges Houston-Based Broker With Defrauding Florida Municipalities
The Securities and Exchange Commission charged a Houston-based broker with engaging in unauthorized and unsuitable trading on behalf of two Florida municipalities, putting them at risk of losing millions of dollars while he personally made over 14 million in commissions.

$418 Million Fair Fund Distribution to Harmed Investors in Invesco Mutual Funds

The Fair Fund distribution stems from a prior SEC enforcement action against IFG. This distribution also includes money from two other Fair Funds related to separate unlawful marketing timing enforcement actions that affected Invesco investors.

Investment Adviser charged by SEC in Fraudulent Scheme Utilizing Football Stars
The Securities and Exchange Commission filed securities fraud charges against Kurt B. Barton and Triton Financial LLC,
for operating a multi-million dollar scam that used former professional football players to promote its offerings

I am pleased to announce that yesterday our Investment Fraud Seminar in West Palm Beach was a huge success. It was held in the beautiful Phillips Point Club. The beautiful intracoastal was a great backdrop for this well attended Seminar.

The 4 hour seminar, Investing in a Post Madoff Environment: Financial Fraud: How it's accomplished, how to detect it, and how to recover from it was attended by over 100 people from South Florida. The attendees included, CPAs, Attorneys, Bankers, Financial Representatives and a host of other professionals. The Seminar was sponsored by the Financial Services Divsion of LaBovick & LaBovick, P.A.

Speakers at the Seminar included:

William Nortman, Esq., Akerman Senterfitt

Richard A. White, Turris Consulting, LLC

Moderator: Jeffrey S. Grubman, Esq, Jeffrey S. Grubman, P.A.

Topics coverd at the Seminar included areas such as: Investment fraud, Ponzi schemes, FINRA, Churning, Florida Investor Protection Act, Churning, and much more.

We look forward to sharing more information on our next educational seminar on investment and financial fraud.

If you would like to have a transcript of the seminar or more information on investment fraud, let us know.

Our vendor partner for this program, the Daily Business Review, will be publishing a printed version of the transcript in 3 - 4 weeks in their paper as a supplement.

Stay tuned...

In an effort to educate industry professionals on how to fight financial fraud, The Financial Services Division of LaBovick & LaBovick, P.A. is holding a Financial Fraud Seminar in conjunction with the Daily Business Review on the very relevant subject:

Investing in a Post Madoff Environment: Financial Fraud: How it's accomplished, how to detect it, and how to recover from it.

The Seminar will be held on November 19, 2009 - 8am at Phillips Point Club in West Palm Beach.

Featured Speakers for the Financial Fraud Seminar: Investing in a Post Madoff Environment include:

William Nortman, Esq., Akerman Senterfitt

Richard A. White, Turris Consulting, LLC

Moderator: Jeffrey S. Grubman, Esq, Jeffrey S. Grubman, P.A.

This seminar is approved by the Florida Bar for 4.0 CLE Credits and 3 CPE Credits for Accounting and Financial Professionals.

Seminar Description:
Just over one year after Lehman Brothers disappeared, how does a professional help clients navigate the ever-changing financial industry landscape? Is the "great deal" your client brought to you the next Microsoft or the next Madoff? This Financial Fraud Seminar will feature speakers with an average of 20 years of securities industry and regulatory experience. They will discuss investment fraud techniques, discovery, prevention and what to do if you have a client who is a victim.

According to a recent report issued by the Office of the Inspector General (OIG), the Securities and Exchange Commission’s (SEC) enforcement division needs to improve its processes and procedures for investigating and managing the fight against securities fraud. The main example cited in the report was the most current and most blatant example of the SEC’s failure to properly investigate securities fraud complaints - Bernard Madoff’s multi-billion-dollar Ponzi scheme. The report issued by the OIG stated that complaints about Mr. Madoff’s possible involvement in securities fraud were received by the SEC as long ago as 1999. Even though complaints of alleged fraud were made to the SEC in regard to Mr. Madoff, SEC staff failed to recommend that the SEC take action on these complaints.

The purpose of the OIG’s report was to determine the SEC enforcement department’s shortcomings and to identify those areas in which the department needs to make improvements to better fight securites fraud. The goal of the report was to bolster SEC enforcement measures in an effort to prevent another securities fraud case with such far-reaching implications and consequences as the Madoff case. It is the SEC’s job to protect investors from securities fraud. When the department fails to properly carry out its job duties the ramifications can spell disaster for investors.

The following systemic problems within the SEC’s enforcement department were identified in the OIG’s report: staff’s failure to thoroughly review complaints; due diligence was not exercised regarding complaints; inexperienced staff conducted unsupervised investigations; complaints were not sufficiently reviewed; staff failed to seek assistance from other departments and divisions; staff did not verify information with independent third-party representatives; administrative tasks were not completed in a timely manner. According to the OIG report, additional areas in which staff felt changes needed to be made and information clarified included: case handling procedure, program priorities, and working relationships.

The report issued by the OIG offered 21 recommendations to the department in order to create a more effective program. These recommendations focused on management control, establishment of formal guidelines, and a review of existing policy and procedures. The Director of Enforcement at the SEC stated that these measures would be implemented.

To read more on the this of OIG Recommendations view the following: Office of Inspector General (OIG) Audit on SEC - Program Improvements Needed within the SEC's Enforcement Division, Housingwire.com