Scams - The Doss Firm, LLC

New Class Action Targets National Fraudulent Healthcare Insurance Scheme

The Doss Firm — Thu, 13 Jun 2019 21:55:00 GMT

Lawsuit Filed on Behalf of Victims of the Simple Health Insurance Scam

MIAMI June 12, 2019 — As health insurance fraud penetrates America’s healthcare industry to target vulnerable consumers, Miami-based law firm Levine Kellogg Lehman Schneider + Grossman (LKLSG) and Atlanta-based The Doss Firm filed a class action complaint against Health Insurance Innovations (HIIQ), Inc. and Health Plan Intermediaries Holdings, LLC (HPIH) for their role in the Simple Health Plans fraudulent insurance scheme.

The lawsuit alleges HIIQ and HPIH directed, aided and abetted the $150 million fraud perpetrated by Simple Health Plans, a South Florida company that was shut down in October 2018 by the Federal Trade Commission. The lawsuit alleges that HIIQ took part in defrauding hundreds of thousands of vulnerable consumers nationwide, leading them to believe that their limited benefit indemnity plans and medical discount plans were major medical insurance that met the requirements of the Affordable Care Act.

“The scheme carried out by HIIQ and HPIH through Simple Health Plans created devastating consequences for victims nationwide,” said Jason Kellogg, Partner at LKLSG. “These folks thought they were doing the right thing in purchasing health insurance. Instead, they were left mostly uninsured.”

Co-Lead Plaintiff Chris Mitchell of Kansas was left with bills exceeding $40,000 after having surgery to treat an aggressive form of cancer. Co-Lead Plaintiff Elizabeth Belin of Ohio was billed more than $48,000 in medical expenses because her limited benefit indemnity plan, which she was told was a PPO, did not cover the surgery.

Simple Health was one of the largest brokers for HIIQ, a publicly traded distributor of health insurance and supplemental plans that financed, sold plans through, acted as the third-party administrator for, and provided customer service for Simple Health.

The Federal Trade Commission warned that thousands of potentially unaware victims continue to be charged by HIIQ for plans purchased through Simple Health.

“This scheme victimized the most vulnerable patients across the country,” said attorney Jason Doss, owner of the Doss Law Firm. “The plaintiffs are the consumers that the Affordable Care Act was designed to protect.”

For more information, you can call (855) 534-4581

Complaint below:Belin Complaint

Investors Need to Be Careful About Who Has Custody of Their Money

The Doss Firm — Thu, 22 Jan 2015 21:43:00 GMT

The Securities and Exchange Commission recently filed fraud charges against a Fort Lauderdale, Florida-based investment advisor and related funds in the federal district court for the Southern District of Florida. The SEC’s complaint names Frederic Elm (formerly known as Frederic Elmaleh), his unregistered advisory firm Elm Tree Investment Advisors LLC, and three funds: Elm Tree Investment Fund LP, Elm Tree “e”Conomy Fund LP, and Elm Tree Motion Opportunity LP.

According to the SEC, Elm perpetrated a Ponzi scheme – in effect recycling new investor money to earlier investors, and using investor funds the funds for personal expenses, such as a $1.75 million home, luxury automobiles, and jewelry. In this way, Elm allegedly stole at least $17 million from unsuspecting investors. This kind of misconduct violates the anti-fraud provisions of federal securities laws and SEC rules.

The investors sent their investment funds to Elm by wire transfer or by mailing a check. Elm deposited the funds in various bank account that he controlled. In this way, Elm had custody and control over the investors’ funds, and was able to misappropriate the funds.

Investors should be wary of sending money anywhere other than to an account set up for them at a well-known, trustworthy financial institution. Normal operating procedure is for investment advisors to manage a client’s money held in an account at a reputable firm, which would have actual custody of the funds and safeguards in place to prevent the kind of theft alleged by the SEC.

Sudden Collapse of Oil Prices Surprised Stock Market, but Not Industry Insiders

The Doss Firm — Tue, 16 Dec 2014 21:45:00 GMT

The collapse in oil prices was a major shock that took a lot of people by surprise. For years the story line had been that the world was running out of oil and America was dependent on foreign oil produced by governments not friendly to U.S. interests. With dwindling supplies, the price of oil had to be higher in the future. Sellers of energy stocks and other oil and gas investments had a compelling story to tell potential investors.

Despite this oil-depletion story line, however, the sudden and sharp decline in oil prices was not really unexpected. According to Gregory Zuckerman, author of The Frackers, the U.S. experienced the largest crude oil production increase in history in 2012, and, in 2013, the U.S. increased daily output from 5 million barrels per day to 7.5 million – on a track to outproduce Saudi Arabia by 2020. As for natural gas, production increases have led to price declines of 75% since 2008. Better technologies like horizontal drilling and hydraulic fracking – a process for accessing oil and gas trapped in dense rock – have allowed these production increases and price declines to occur.

Oil and gas investment offerings have become more common in these days of low interest rates, as investors have been unable to generate enough income from bond interest and stock dividend payments. Also, state securities regulators have long warned that high oil prices have allowed promoters to generate interest in investments in energy-related business ventures.

Sellers of investments are legally required to be accurate and completely truthful in marketing investments, disclosing all important risks, and are prohibited from recommending investments that are unsuitable for the investor. But sellers do not always do that. Investors who lost money in energy-related investments that were either unsuitably risky for them, or whose sellers misrepresented or failed to disclose important risks, have valid legal claims to recover those losses.

LPL Financial Representative Operating in Buford, Georgia Defrauded Investors Out of $1.7 Million in Savings

The Doss Firm — Mon, 15 Sep 2014 21:40:00 GMT

On August 26, 2014, a federal district court in Atlanta ordered Blake Richards of Buford, Georgia to pay approximately $1.7 million of money that he obtained from investors by fraudulent means, plus interest of nearly $50,000 and a civil penalty of $80,000. The money is to be paid to and held by the district court until further order. Unfortunately, Richards claims to be indigent, and the investors he defrauded are unlikely to recover any money from Richards, although they may have claims against LPL Financial. At least two of the investors defrauded by Richard were elderly and most of the misappropriated funds were from retirement savings and life insurance proceeds.

Richard was associated with LPL Financial, which is a brokerage and investment advisory firm headquartered in Boston. Richards’ financial advisory firm, Lanier Wealth Management, LLC, which operated like a branch office of LPL Financial, is located in Buford, Georgia.

When the investor victims had money to invest, Richards would have them write checks to entities he controlled. The entities were named Blake Richards Investments and BMO Investments. Richards told his victims that he would cause the money to be invested, but he actually siphoned off the money and used it for his personal benefit.

One of Richards’ victims was a woman he had dated. Her father became another victim. Still another victim was a woman who received over $200,000 in life insurance proceeds when her husband had died of pancreatic cancer. Richards cultivated a relationship of seeming trust, going so far as to deliver pain medication to her husband during a snowstorm in his 4-wheel-drive vehicle.

Richards provided fictitious account statements detailing non-existent investments. At least one of the statements purported to be on LPL Financial letterhead. When Richards was questioned or challenged by a victim, he always had an answer. When one victim asked Richards why she had not received statements from LPL Financial, he told her that her accounts had not been “linked” properly. When another questioned him about the status of her supposed investments, Richards showed her a phony statement generated by an internet-based software program.

In addition to losing the money entrusted to Richards, one victim’s social security check was subjected to garnishment by the IRS, because of an improper IRA distribution that was caused by Richards, and which he promised to correct, but did not.

There are some lessons to be learned from this awful story. Investors should never give custody of their money to an individual or a business they do not have good reason to believe is legitimate and reputable. If you do not have the time and/or expertise to invest the money wisely yourself, you are probably better off obtaining advice from a fee-only financial planner (i.e., one who does not act as a broker or invest the money for you) and implementing the plan by investing in well-diversified stock and bond index funds, keeping an appropriate amount (a “rainy day fund”) in relatively safe and liquid investment like a certificate of deposit or money market fund. Money that you may need to access sooner in the next three years should never be invested in stocks or other volatile investments. To learn more, read books on investing by John C. Bogle, the founder of Vanguard mutual funds and the person widely credited with inventing index funds.

Any time you have a question about your investments – either proposed or already made – we would be happy to share our experience. Brokers and investment advisors have certain duties to investors that, when breached, give rise to legal rights to recoup investment losses caused by the breach. For many years now, we have represented investors in securities arbitrations against brokerage firms and financial advisers, helping them to recover losses in unsuitable investments. It is certainly possible to recover such investment losses in securities arbitration. However, we would prefer to help you avoid bad investments in the first place.

Prosecutors Say Financial Fraud Is on the Rise

The Doss Firm — Tue, 02 Sep 2014 04:46:00 GMT

As if ISIS terrorists, ebola, militarized police, and race riots are not enough, we now read in the Atlanta Business Chronicle that white collar crime is on the rise (“White Collar Crime Wave,” by Dave Williams, August 22-28, 2014). Prosecutors report a significant increase in white collar criminal activity, according to the article. One former federal prosecutor was quoted as saying: “It’s a national trend.”
White collar crime includes various forms of financial fraud. Examples include Ponzi schemes (think Madoff, where cash flow from newer victims was used to pay previous investors until the house of cards collapsed) and affinity fraud. In an affinity fraud scenario, the investment promoter gains credibility and hooks victims by playing up things they have in common.
Perhaps the most common and outrageous example of affinity fraud that is the proverbial “wolf in sheep’s clothing” who preys on church members. The article mentioned the sad case of Ephren Taylor II, the purported wealth builder who defrauded members of a prominent Atlanta church out of millions of dollars.
Elder financial exploitation is another tragic and infuriating example of the kind of white collar criminal activity that is on the rise.
Victims of financial fraud, through no fault of their own, undergo a kind of vertigo similar to that experienced by a pilot, who, in a crisis, must decide whether to trust his or her own strong instinct (which is typically the tragic mistake) or what the instruments are showing, which seems to be counterintuitive. Similarly, victims of financial fraud often report that they experienced conflicting signals: the signal from the fraudster, who is often a polished and convincing confidence (con) man versus an internal warning bell that something is not quite right about this opportunity or the person conveying it.
When it comes to deciding whether to invest, especially in an alternative or unconventional investment, investors are well-advised to be skeptical, and act accordingly. If the business is so great, why do they need financing from investors like me? Why haven’t banks or professional venture capitalists provided financing? If the opportunity is so great, why is the promoter selling instead of buying?
The Doss Firm represents people from all walks of life who are victims of financial fraud. If you have fallen victim to financial fraud, you should consult with attorneys who have experience representing investors, because you may be able to recover some or all of your losses. You should do so promptly, because time limits, such as statutes of limitation, can bar some or all of your claims.

Unregistered Investments Are Almost Always Unsuitable, and Are Often Fraudulent

The Doss Firm — Thu, 21 Aug 2014 21:36:00 GMT

Private placements are investments that have not been registered with the United States Securities and Exchange Commission. The lack of registration is either unlawful, or lawful due to an exemption from registration under the securities laws. Private placement investments are always high-risk investments that are complex, not transparent, and illiquid (cannot be readily sold) – despite the fact that they are often presented as having little or no risk, and are sometimes fraudulent.

Issuers of private placement investments often employ unregistered brokers and financial advisers to sell them to individual (or retail) investors. The sellers of private placements typically receive outsized commissions, and thus do very well indeed. On the other hand, many investors who could ill afford it have lost a substantial portion of their life savings by investing in private placements.

The SEC recently published an Investor Alert identifying 10 red flags that an unregistered offering (private placement) may be fraudulent. The red flags include such things as promises of high returns with little or no risk; involvement of unregistered sales people; high-pressure sales tactics; amateurish, sloppy or no documentation; absence of the “usual suspects” involved in “legitimate” private placements (lawyers, accountants, etc.); the old “mail drop as corporate address” trick; cold call solicitations; and phony backgrounds of managers or promoters.

While it is true, as the SEC indicates, that some private placements may be used by legitimate businesses to raise capital, it is also true that private placements may be fraudulent investment schemes. Even if a private placement is legitimate, it is always improper for an investment adviser or broker to recommend that an individual investor invest a substantial percentage of his or her liquid net worth in such investments due to the risk of losing everything you invest.

The laws requiring registration of securities offerings are designed to protect investors, though that protection may be illusory. Generally, unregistered securities can only be sold to so-called “accredited investors.” For an individual to be considered an accredited investor, he or she must either have annual income of over $200,000 for the prior two years (or $300,000 jointly with a spouse), or have a total net worth of over $1 million above the value of the primary residence and any loans secured by it.

Now, it is still true that $1 million is a lot of money, but it is not nearly as much as it used to be back when these “accredited investor” rules were written. The “accredited investor” requirement is supposed to protect investors but, arguably, the income/net worth cut-off is too low. It is based on a false premise that anyone with $200,000 or $300,000 annual income or a net worth of $1 million is wealthy and, therefore, able to bear the loss of his or her entire investment, even if that investment is all or a substantial portion of that person’s net worth.

The bottom line is that private placements (even if they are not outright frauds) are almost always unsuitably risky and illiquid for individual investors. They should not be recommended to most individual investors by brokers or investment advisers, and would not be recommended were it not for the high sales commissions. If such an investment is presented to you, the best response is to “just say no.” If the opportunity was so great, venture capitalist investors would invest and the issuer would not need to be raising money from people like you and me. More appropriate, liquid, and less risky investment alternatives that do not pay the seller high fees or commissions are usually available.

If you are stuck in one of these investments, you may be able to get your money back by undoing the sale (a legal remedy called rescission). We would be glad to discuss your options with you, so feel free to give us a call.

J.P. Morgan Chase Avoids Criminal Prosecution for Hosting Madoff Fraud

The Doss Firm — Thu, 09 Jan 2014 21:53:00 GMT

Banking giant J. P. Morgan Chase has reached a deal with federal prosecutors to avoid criminal prosecution for its role in the Bernard Madoff Ponzi scheme. According to the prosecutors, J. P. Morgan, which had custody of Madoff accounts, witnessed suspicious money transfers, too-good-to-be-true investment returns, unverifiable trading activity, and the use of a one-man accounting firm. But while the bank connected the dots, filed a suspicious activity report with British officials, and was concerned enough to withdraw its own money from Madoff feeder funds, it failed to protect investors in that it “never closed or even seriously questioned Madoff’s Ponzi-enabling 703 account,” according to U. S. Attorney Preet Bharara.

The nation’s largest bank faced two felony charges of violating the Bank Secrecy Act because it did not file a Suspicious Activity Report after witnessing red flags about Madoff and did not have appropriate anti-money laundering compliance procedures in place. The charges come on top of other legal woes at J. P. Morgan, including a $13 billion settlement with the U. S. government in connection with its mortgage practices that led up to the financial crisis.

Madoff reportedly perpetrated his Ponzi scheme through accounts at J. P. Morgan from 1986 up until his arrest in 2008. Almost all of his clients’ funds were deposited at J. P. Morgan, and money flowed into and out of those accounts. In October 2008, one of J. P. Morgan’s analysts wrote a memo indicating that the bank could not verify Madoff’s trading activities or custody of assets. It also questioned Madoff’s “odd choice” of using a small, unknown accounting firm. Also in October 2008, J. P. Morgan filed a report with British regulators that stated in part that Madoff’s purported investment returns were “too good to be true.”

J. P. Morgan will pay approximately $2.24 billion to settle criminal charges plus another $350 million in civil penalties. In return, the U. S. will defer prosecution of the bank for two years as long as the bank complies with certain provisions, including reforming its anti-money laundering policies and cooperating with ongoing investigations. No individual executives at J. P. Morgan Chase were charged with a crime.

In addition to the criminal case settlement, the trustee for the liquidation of Bernard L. Madoff Investment Securities, LLC (“BLMIS”) appointed by the Securities Investor Protection Act (SIPA), Irving H. Picard, announced recovery agreements with J. P. Morgan totaling approximately $543 million for the benefit of BLMIS customers, for which bankruptcy court approval is being sought. The SIPA trustee has recovered approximately $9.783 billion for the BLMIS Customer Fund, or about 56% of the $17.5 billion that was lost in the Madoff ponzi scheme, according to a press release from the office of Mr. Picard.

While $1.7 billion is reported to be the largest bank forfeiture in history, investor advocates have been critical of the criminal case settlement. In particular, they criticize the failure to charge individual bank executives, who may have turned a blind eye to Madoff’s fraud, with a crime. They also criticize the leniency of the settlement terms as amounting to an ineffective deterrent.

Professional Athlete Wealth Management Group Allegedly Involved in Discount Firm’s Fraudulent Sales Case

The Doss Firm — Fri, 19 Apr 2013 21:57:00 GMT

On April 12, 2013, we posted a blog entitled FINRA Charges Discount Firm with Fraudulent Sales, which detailed FINRA’s complaint against Success Trade Securities Inc, an online discount firm, and its CEO, Fuad Ahmed alleging fraudulent sales of promissory notes. New details are emerging in this case.

Yahoo! Sports reports that many of Success Trade Securities Inc.’s clients were prominent NFL and NBA players and those investors were led by Jade Private Wealth Management to invest with Success Trade Securities. This will undoubtedly make Jade Private Wealth Management a prime target for investors seeking to recover their losses.

We recommend that all investors who were directed by Jade Private Wealth Management to invest with Success Trade Securities should document all conversations that you had with Jade and preserve all written communications.

In the complaint, FINRA alleged that players were typically introduced to Success Trade by representatives of Jade Management, including prominent Jade adviser Jinesh “Hodge” Brahmbhatt. In turn, Success Trade is alleged to have made at least $1.25 million in payments to Jade Management since March 2009. Furthermore, Success Trade funded Jade Management’s business from approximately March 2009 through March 2010.

Brahmbhatt is currently registered in the financial advisors program established by the NFL Player’s Association. Brahmbhatt spoke to Yahoo! Sports Wednesday night and said he still does not know whether Success Trade was operating a Ponzi scheme with investor money.

According to multiple sources that spoke to Yahoo! Sports, several professional athletes have either been contacted or been urged to contact investigators from the U.S. Department of Justice, the FBI and the SEC.

The Doss Firm, LLC represents investors nationwide who have lost money as a result of investment fraud or due to faulty investment advice. If you believe that you may be a victim of investment fraud and would like to speak with us, please call our firm for a free consultation.

FINRA Bars Florida Broker for Unsuitable Recommendations to 31 NFL Players

The Doss Firm — Fri, 08 Mar 2013 23:58:00 GMT

On March 7, 2013, FINRA barred Lighthouse Point, Florida broker dealer Jeffrey Brett Rubin from the securities industry for making unsuitable recommendations to his client.

Rubin recommended to his customer, an NFL Player, to invest in illiquid, high-risk securities issued in connection with a now-bankrupt casino in Alabama. As a result, the customer lost approximately $3 million. Based on Rubin’s referrals, 30 other NFL players also invested in the casino project and lost approximately $40 million. Rubin also failed to obtain the required approval from his employers to participate in the securities transactions involving the casino.

Rubin operated a Florida-based company, Pro Sports Financial, which provided financial-related “concierge” services to professional athletes for an annual fee of $40,000. Between March 2006 and March 2011, Rubin was registered as a broker at Lincoln Financial Advisors Corporation and Alterna Capital Corporation. During this period Rubin never informed or received approval from these employers.

Furthermore, Rubin received a 4% ownership stake and $500,000 from the Casino project promoter for the above referrals.

“This case demonstrates how broker misconduct can target high-income, inexperienced and vulnerable investors,” said Brad Bennett, FINRA’s enforcement chief.

The FINRA action did not name any of the NFL clients who lost money, but news reports identified some of them as: Fred Taylor, Jevon Kearse, Terrell Owens, Plaxico Burress, Clinton Portis, Roscoe Parrish, Gerard Warren, Kyle Orton, Greg Olsen, Santonio Holmes and Santana Moss.

Former Life-Settlement Executives Sentenced to 10-Years in Prison for Ponzi Scheme

The Doss Firm — Wed, 27 Feb 2013 15:00:00 GMT

Howard G. Judah and Gergory F. Jablonski, former executives at National Life Settlements LLC, were each sentenced to 10 years in prison for their parts in a $30 million investment scheme that utilized insurance agents to sell products. In 2009, the Texas Securities Board uncovered their securities fraud and selling of unregistered securities. They have since pleaded guilty.

National Life Settlements, LLC solicited money from both active and retired state employees and teachers by having funds rolled out of retirement funds and into National Life Settlements investments. According to the Texas Securities Board, the company quickly grew by using insurance agents to sell products. Agents, many of whom were not licensed to sell securities, earned more than $4 million in commissions.

However, the company never acquired the necessary life insurance policies needed to pay investors. They just paid new investors with money from earlier investors (i.e. Ponzi Scheme) and told investors that the company had received billions of dollars from the Federal Reserve.

Following the probe in 2009, the company was placed in receivership, and investors received about two-thirds of their investments back.

SEC Stops Investment Scheme Aimed at Foreign Investors

The Doss Firm — Thu, 14 Feb 2013 20:09:00 GMT

On February 8, 2013, the SEC announced charges that it brought against an individual living in Illinois and two companies behind a $150 million investment scheme that defrauded foreign investors seeking profitable returns and a legal path to U.S. residency through a federal visa program.

The SEC alleged that Anshoo R. Sethi created two entities, A Chicago Convention Center (ACCC) and Intercontinental Regional Center Trust of Chicago (IRCTC). Through these entities, Sethi fraudulently sold more than $145 million in securities and collected $11 million in administrative fees from more than 250 investors primarily from China.

The complaint states that Defendants duped investors into believing that by purchasing interests in ACCC and that they would be financing construction of the “World’s First Zero Carbon Emission Platinum LEED certified” hotel and conference center near Chicago’s O’Hare Airport. Investors were misled to believe that their investments were simultaneously enhancing their prospects for U.S. citizenship through the EB-5 Immigrant Investor Pilot Program, which provides foreign investors an avenue to U.S. residency by investing in domestic projects that will create or preserve a minimum number of jobs for U.S. workers.

The SEC stopped this scheme in its application stage at the U.S. Citizenship and Immigration Services. The SEC filed its complaint early, under seal, and obtained an emergency court order to protect the remaining $145 million in investors’ assets that were still at risk of being misappropriated. The case was unsealed on February 8, 2013.

Stephen L. Cohen, Associate Director in the SEC Division of Enforcement, stated “Sethi orchestrated an elaborate scheme and exploited these investors’ dream of earning legal U.S. residence along with a positive return on their investment in a project that was not nearly the done deal that he portrayed… the good news is that working closely with USCIS, we intervened early and stopped him from getting very far, and the asset freeze preserves nearly all of the money invested.”

SCANA Class Action Moving Forward

The Doss Firm — Wed, 13 Feb 2013 20:05:00 GMT

In July 2012, The Doss Firm, LLC filed a class-action lawsuit against SCANA Energy in the United States District Court of the Northern District of Georgia, Atlanta Division. The complaint alleged that SCANA overcharged hundreds of thousands of Georgia customers for their natural gas usage in violation of Georgia’s Natural Gas Competition and Deregulation Act.

Subsequent to the filing of the complaint, SCANA Energy filed a motion to dismiss. On February 8, 2013, the Court ruled on SCANA’s motion to dismiss. In sum the Court held:

Plaintiffs sufficiently alleged facts for violations of O.C.G.A. §46-4-160(h);
Plaintiffs sufficiently stated a claim for relief under Rule 515-7-6-.02(a)(9);
Plaintiffs may seek remedies under the Gas Act, which incorporates remedies available under the FBPA;
Plaintiffs are not required to meet the procedural hurdles of the FBPA;
Plaintiffs sufficiently alleged facts for violations of O.C.G.A. §46-4-160.2; and
Defendant’s motion to dismiss was denied on all points.

The Court’s ruling is significant because the order stated:

The claims against SCANA can move forward;
The Plaintiffs could be entitled to 3x the damages for the intentional misconduct by SCANA; and
The burden is now on the Defendant, not the Plaintiffs, to prove that SCANA did not overcharge its customers.

The Doss Firm, LLC is currently representing class members in the above suit. If you believe that you may have been overcharged as a SCANA customer, and would like to speak with us, please call our firm for a free consultation.

Atlanta Business Man Charged With Wire Fraud

The Doss Firm — Tue, 12 Feb 2013 20:01:00 GMT

On February 11, 2013, Kevin Patrick Loughery was charged with wire fraud. Loughery is the co-founder of Geometrix, an Atlanta start-up company. Loughery allegedly committed wire fraud and defrauded investors out of approximately $800,000.00.

U.S. Attorney Sally Yates stated “instead of keeping his business investors’ funds secure in an escrow account, the defendant is charged with using hundreds of thousands of dollars to support his lavish lifestyle…the charges against Loughery reflect our ongoing commitment to crack down on investment fraud.”

Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office, stated, “when the defendant diverted investor funds to his personal account, he left behind his multiple investors-turned-victims now suffering substantial financial losses while he pursued a life of affluence. The FBI remains well-suited and committed to investigating such cases of wire fraud that often significantly impact many victims.”

Starting in 2007, Loughery allegedly solicited investments from friends and business associates. He instructed investors to wire money to Geometrix’s escrow account and misrepresented that the investors were receiving shares of Geometrix. In reality, the investors were wiring money to Loughery’s own account for a separate business, KLM Investments, of which Loughery was the sole proprietor.

Yield Producing Investments Continue to Harm Retirees

The Doss Firm — Mon, 11 Feb 2013 23:02:00 GMT

On February 10, 2013, the New York Times published an article entitled Complex Investments Prove Risky as Savers Chase Bigger Payoff which detailed how regulators across the country are still seeing an increase in losses and fraud cases revolving around complex yield producing products.

Since traditional income-producing like, CDs, currently offer low interest rates crisis, many retirement investors have been targets for investments that purportedly pay above average interest with little to no risk. These alternative investments that hold out the promise of higher returns while supposedly being immune to the volatility of stock markets. Massachusetts Secretary echoed this stating “Since the crisis, we’ve seen more and more people reaching out into different types of exotic investments that are a big concern to us.” State and federal securities regulations have stated, “those alternative investments have now had time to go sour in big numbers…and are making up a majority of complaints and prosecutions.”

Given this low interest rate environment this trend is unlikely to change. The article states “Regulators are warning investors that the dangers are unlikely to recede, given the Federal Reserve’s pledge to keep interest rates near zero and the push among financial firms to earn more revenue from so-called alternative investments marketed to retail investors.”

The money that retail investors have in alternative investments in the US more than doubled from 2008 to 2012, to $712 billion from $312 billion. Two of the more popular, and dangerous, alternative investment products have been private placements and non-traded REITs.

Private placements, once only available to wealthy and sophisticated investors, are now being marketed to retirement savers. The article states “Several loopholes, including relaxed procedures for verifying wealth, have allowed them to end up in the portfolios of less sophisticated retirement savers.”

Non-traded REITs are also heavily marketed to unsophisticated retirement savers because they have fewer rules about who can buy them. Non-traded REITs are risky investments that are bought and sold in private transactions. Sale of non-traded REITs grew to $65 billion last year, up from $43 billion in 2009.

Financial advisors market the private nature of these investments as safe investment because the investments are less likely to fluctuate with the stock market. In reality, these products are illiquid and extremely difficult for investors to accurately value.

The newest alternative investment product that will likely be mis-sold to investors are, Business Development Companies. These products invest in the debt of small companies. Sales of these investments grew to $4.5 billion last year, up from $8 million in 2008.

TAX Relief Scammers Settle With FTC

The Doss Firm — Thu, 07 Feb 2013 22:56:00 GMT

On February 5, 2013, the Federal Trade Commission’s stance to crack down on tax relief companies took a major step forward. American Tax Relief LLC agreed to pay $15 million to settle claims that they operated a scheme that falsely advertised debt-relief services that they company never provided. The scheme took in more than $100 million by falsely claiming they could reduce clients’ tax debts. This is FTC’s first major action against a tax relief company.

American Tax Relief LLC was able to gain clients by its increased efforts to market on television, radio, and the internet which used actors to depict clients who said they had been able to reduce back taxes by thousands, even hundreds of thousands, of dollars. The company charged new clients between $3,200-$25,000 in fees for its services.

Steven Baker, spokesman for the FTC stated that “tax relief companies have stepped up marketing to consumers over the last few years, as more Americans slipped behind on bills…there are a lot of people who have gotten behind on income taxes and are looking for a solution…that opens the door to tax relief companies, which advertise extensively.”

Investors May Have a Path to Recovery in Cay Clubs Resorts and Marinas Ponzi Scheme

The Doss Firm — Mon, 04 Feb 2013 20:15:00 GMT

On January 30, 2013, the SEC charged five former real-estate executives with defrauding investors in an investment scam. The investors were led to believe that they were funding the development of five-star destination resorts in Florida and Las Vegas when they were actually buying into a ponzi scheme.

The SEC alleged in the complaint that Cay Clubs Resorts and Marinas raised more than $300 million from nearly 1,400 investors nationwide through a network of hundreds of sales agents, marketing seminars, and podcasts that touted the profitability of purchasing units at Cay Clubs resort locations. The executives charged in the complaint promised immediate income from a guaranteed 15% return and a future income stream through a rental program that Cay Clubs managed. However, the Cay Clubs executives “used new investor deposits to pay leaseback returns to earlier investors.” Additionally, the executives “paid themselves exorbitant salaries and commissions totaling more than $30 million, and investor funds also were misused to buy airplanes and boats.” The scheme began in 2004 and Cay Clubs abandoned its operations in 2008, but still continued its scheme.

The SEC’s complaint filed in U.S. District Court for the Southern District of Florida charges the following former Cay Clubs executives:

• Fred Davis Clark, Jr. – president and CEO • David W. Schwarz – chief accounting officer • Cristal R. Coleman – manager and sales agent • Barry J. Graham – sales director • Ricky Lynn Stokes – sales director
More often than not, the perpetrators of ponzi schemes spend money as fast as they steal it. As a result, victims looking to recover their losses typically must sue third parties who were involved in the unlawful transactions. As stated above, the fraudsters here defrauded nearly 1,400 investors through a network of hundreds of sales agents.

These sales agents may be the key to recovering investor losses because any person that sells securities must be a registered representative of a brokerage firm. In addition, sales agents and their firms are required to conduct their own due diligence about the investments they recommend.

It is imperative for victims of this ponzi scheme to begin collecting documents and information to help identify all parties that were involved in the unlawful transactions. These documents include but are not limited to:

• All contracts signed by the customer,
• All marketing material that the sales agents provided to the investors,
• All subscription agreements or offering memorandums that describe the investments at issue,
• All emails and correspondences between the investor and any party that they spoke to in connection with the investments,
• All calendar entries of meetings and notes of conversations.

Furthermore, investors need to be careful before drafting any complaint letters to regulators because that document constitutes evidence that can be used against the investors in subsequent legal proceedings. As a result, it is recommended that investors contact an attorney to draft any complaints.

Texas Trader Charged With Affinity Fraud

The Doss Firm — Fri, 01 Feb 2013 20:38:00 GMT

On January 29, 2013, the SEC charged Firas Hamdan, a day trader in Sugar Land, TX, with “defrauding investors in his supposed high-frequency trading program and providing them falsified brokerage records that drastically overstated assets and hid his massive trading losses.”

“The SEC alleges that Firas Hamdan particularly targeted fellow members of the Houston-area Lebanese and Druze communities, raising more than $6 million during a five-year period from at least 33 investors. Hamdan told prospective investors that he would pool their investments with his own money and conduct high-frequency trading using a supposed proprietary trading algorithm. Hamdan promised annual returns of 30 percent and assured investors that his program was safe and proven when in reality it was a dismal failure, generating $1.5 million in losses.”

Hamdan targeting the Lebanese and Druze communities is another example of affinity fraud, which is a scheme where a fraudster attempts to use a common bond with investors to gain their trust and solicit investments. Hamdan is well-known in the Lebanese and Druze communities in the Houston area and is a former treasurer of the Houston branch of the American Druze Society.

“The complaint seeks various relief including a temporary restraining order, preliminary and permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.”

Peachtree City Man Found Guilty in Ponzi Scheme

The Doss Firm — Tue, 22 Jan 2013 21:34:00 GMT

On July 16, 2009, our blog published an article entitled The Gresham Company Charged in $15 Million Ponzi Scheme. As we previously described, Gresham promised monthly returns of 5 to 10 percent with very little risk. He would then pay off certain individuals with money invested by new individuals. It is said by the SEC that Gresham would communicate the bogus returns of the scheme to investors through emails.

Now on January 12, 2013, the AJC reported that Eldon A. Gresham has pleaded guilty to a mail fraud scheme where he defrauded elderly investors out of $15.8 million.

Mr. Gresham used Christianity as a platform to sell the unlawful investments. This is commonly referred to as affinity fraud. Affinity fraud is a scheme where a fraudster attempts to use a common bond with investors to gain their trust. In this case, Mr. Gresham was a former regional director of the Fellowship of Christian Athletes and “he told potential investors his success was due to the Lord’s blessings, adding he was offering the program to a limited number of Christians for a limited time.”

Georgia Mega Church Pastor Criminally Indicted for Investment Scam

The Doss Firm — Fri, 21 Dec 2012 20:45:00 GMT

On December 19, 2012, Bishop Wiley Jackson, and his brother Rodney Jackson, with Gospel Tabernacle Church were indicted on eight (8) counts of criminal charges for running an investment scheme.

The indictment charges the Jackson brothers with:

The sale of unregistered securities (O.C.G.A 10-5-5(a)(1)(3));
The sale of securities by one who is not a registered salesman of securities (O.C.G.A 10-5-3(a)); and
The failure to inform potential investors of the risk associated with the securities (O.C.G.A. 10-5-12(a)(2)(B)).

These are all violations of the Georgia Securities Act of 1973, that was still in place when these violations were alleged to have occurred in 2002.

The Jackson brothers were selling securities (investment contracts) for their company Genesis LLC, a corporation NOT registered with the state of Georgia. The brothers pitched these “investments” to the members of Gospel Tabernacle that the monies would be used for ministry related investments, i.e. inspirational books, tapes, and other items.

This is not the first time an Atlanta-based mega church has been alleged of securities law violations, and likely affinity fraud. Affinity fraud is where fraudsters use their common background and interests to relate to victims and gain their trust.

New Birth Missionary Baptist Church and their Bishop Eddie Long are a part of an ongoing suit very similar to what the Jackson brothers are alleged to have done. Because both cases involve affinity fraud, the victims were highly involved in the church and put a lot of trust into their pastors, who used their confidential/fiduciary relationship to coerce the church members into investing.

Who Is Inland American Real Estate Trust, Inc.?

The Doss Firm — Tue, 18 Dec 2012 20:43:00 GMT

In the recent Massachusetts Securities Division suit against LPL Financial over non-traded REITs, Inland American Real Estate Trust was targeted. So who exactly is Inland American? In short, Inland American is the industry’s largest non-traded real estate investment trust.

According to their website, Inland American Real Estate Trust, Inc. is a publicly traded Maryland corporation sponsored by their “affiliate Inland Real Estate Investment Corporation.” It is a subsidiary that was formed to acquire “retail properties and multi-family, office and industrial buildings…either directly or by acquiring REITs or other real estate operating companies.” Also, according to Inland’s website, as of September 30, 2012 Inland American owned….887 properties…8,564 multi-family units and 16,098 lodging rooms.” Its overarching parent company, The Inland Real Estate Group of Companies, Inc. manages assets with a value over $25.8 Billion. Inland American Real Estate Trust itself raised $7.9 Billion from 2004-2009 for REITs.

This most recent complaint in Massachusetts is just further evidence that Inland is in trouble. After all Inland’s original offering price for Inland REITs have dropped substantially since their original offering price. In addition in May 2012, the SEC probed Inland American for multiple possible violations of securities laws that were related to certain fees it charged for managing properties, the timing and amount of distributions paid to investors, transactions with affiliates, and other activities.