Articles Posted in Fraud

Thomas LaganPublicly available records provided by the New York Attorney General’s Office and accessed on July 11, 2018 indicate that the state’s Attorney General, Barbara Underwood, has obtained a grand jury indictment of financial advisor Thomas Lagan, as well as former judge Richard Sherwood, in connection to allegations that the two “orchestrated a complex scheme to steal millions from trusts they were supposed to protect.” Fitapelli Kurta is interested in hearing from investors who have complaints regarding Mr. Lagan.

According to the state’s complaint, the defendants offered estate planning and related service, both legal and financial, to “Capital Region philanthropists Warren and Pauline Bruggeman and Pauline Bruggeman’s sister, Anne Urban, since at least 2006.” Each of these clients had created a revocable trust, with sub-trusts for Anne Urban as well as Pauline Bruggeman’s other sister, Julia Rentz; there were also “other funds… to be awarded to Anne Urban and Julia Rentz outright” after the Bruggemans’ deaths, per the complaint. When the Anne S. Urban Irrevocable Trust was established in 2007, “using some of the funds from the Bruggeman trusts,” Mr. Sherwood was named as Trustee while Mr. Lagan was named as a Successor Trustee.

The complaint alleges that funds through the Anne S. Urban Irrevocable Trust were improperly disposed: though one sub-trust containing about two million dollars was intended “to be returned to the Pauline Bruggemen Revocable Trust for distribution to six named charities upon Anne Urban’s death,” according to the complaint, those funds were instead disposed through the Anne S. Urban Irrevocable Trust “primarily for the benefit of Sherwood and Lagan.” The defendants also allegedly participated in a conspiracy “to deceive an Ohio attorney” into transferring more than two million dollars’ of Julia Rentz’s funds to the trust, “under the premise it would be sent to charity,” when in fact Mr. Sherwood and Mr. Lagan “shared” the funds. The complaint states that they created an entity called the Empire Capital Trust “to benefit themselves,” funding it with more than $1,000,000 in ill-gotten funds: “In January 2015, they allegedly transferred $3,598,908 from AUIT to a Trustco Bank account in Sherwood’s name and $2,693,865.92 from the AUIT to a Trustco Bank account in Lagan’s name.”

https://images.unsplash.com/photo-1518316847866-651fbb917956?ixlib=rb-0.3.5&ixid=eyJhcHBfaWQiOjEyMDd9&s=9749566038e89683cba08ee3fb69dc02&dpr=1&auto=format&fit=crop&w=1000&q=80&cs=tinysrgbA Securities and Exchange Commission (SEC) release published on May 24, 2018 reports that the SEC filed fraud charges against two executives of a microcap company, E-Waste Systems, alleging they defrauded retail investors in a “penny stock scheme.”

Filed in the federal court in the District of Columbia, the complaint alleges that Niel Martin Nielson, CEO of E-Waste Systems, Inc., defrauded investors “by orchestrating a scheme to artificially increase the company’s share price and volume.” He allegedly entered into a “series of sham contracts,” made false and misleading statements to investors, and “booked false revenue” so as to give the impression that E-Waste Systems was quickly expanding its operations across the US, Europe, and Asia, when in fact it had “virtually no operations,” according to the complaint. The SEC alleges he perpetrated the scheme with Carolyn Susan Johnson, E-Waste’s Secretary and Treasurer, who has consented to the entry of a final judgment on these and other charges in federal court in the Southern District of Ohio.

The complaint against Mr. Nielson specifically states: “Nielson, who was the CEO, President, and sole director of EWSI, issued frequent false and misleading statements in press releases and public filings to create the false impression that EWSI was expanding quickly across the world and, by mid-2013, earning millions of dollars in revenues each quarter. The reality was that EWSI had no or virtually no operations at any point in time.” It continues to allege that most of E-Waste’s agreements with third-party recyclers and other companies “had no economic substance,” and that certain of the subsidiaries it was ostensibly using to conduct business were either dormant or had not yet been formed. The complaint states additionally that E-Waste Systems neither directly nor indirectly managed or operated any businesses in China and thus did not have any legitimate basis for reporting revenue from that country. “Nielson had simply agreed to pay the owners of companies in China and individuals affiliated with a consulting firm in China to provide EWSI with financial data at the end of each quarter, which EWSI then reported as part of its consolidated financial results, creating the false appearance of growth and success,” according to the SEC.” These and other actions, according to the SEC, “artificially maintained and at times artificially increased EWSI’s share price and trading volume,” allowing Mr. Nielson to sell millions of E-Waste Systems shares into the market and profit from the artificially increased prices as well as cause harm to “innocent investors.”

Ronald McCookPublicly available records provided by the Financial Industry Regulatory Authority (FINRA) on May 17, 2018 indicate that Arizona-based First Allied Securities broker/adviser Ronald McCook is involved in a pending customer dispute. Fitapelli Kurta is interested in hearing from investors who have complaints regarding Mr. McCook (CRD# 4155186).

Ronald McCook has spent 17 years in the securities industry and has been registered with First Allied Securities in Scottsdale, Arizona since 2014. Previous registrations include National Planning Corporation in Scottsdale, Arizona (2009-2014); Sagepoint Financial in Scottsdale, Arizona (2005-2009); SunAmerica Securities in Phoenix, Arizona (2001-2005); and Washington Square Securities in Des Moines, Iowa (2000-2001). He has passed two securities industry examinations: Series 66 (Uniform Combined State Law Examination), which he obtained on September 8, 2000, and Series 7 (General Securities Representative Examination), which he obtained on July 22, 2000. He is a registered broker and investment adviser with 15 US states and territories: Arizona, California, Colorado, Florida, Illinois, Iowa, Kansas, Michigan, Nevada, New York, Oklahoma, Oregon, Texas, Utah, and Washington.

According to his BrokerCheck report, he has received one pending customer complaint and one denied customer complaint.

Robert Iola

Publicly available records published by the Financial Industry Regulatory Authority (FINRA) and accessed on May 17, 2018 indicate that New Jersey-based Kestra Investment Services broker/adviser Robert Iola has received a customer dispute and a regulatory sanction. Fitapelli Kurta is interested in speaking to investors who have complaints regarding Mr. Iola (CRD# 2103831).

Robert Iola has spent 27 years in the securities industry and has been registered with Kestra Investment Services in Raritan, New Jersey since October 2017. Previous registrations include Commonwealth Financial Network in Raritan, New Jersey (2014-2017); Summit Equities in Parsippany, New Jersey (2004-2014); Lincoln Financial Advisors Corporation in Fort Wayne, Indiana (1998-2004); and Cigna Financial Advisors in Radnor, Pennsylvania (1990-1998). He has passed three securities industry examinations: Series 66 (Uniform Combined State Law Examination), which he obtained on December 22, 2010; Series 63 (Uniform Securities Agent State Law Examination), which he obtained on February 1, 1991; and Series 7 (General Securities Representative Examination), which he obtained on November 16, 1990. He is a registered broker and investment adviser with 22 US states and territories: Arizona, California, Colorado, Connecticut, Delaware, Florida, Illinois, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island and South Carolina.

According to his BrokerCheck report, he has received one customer complaint, one regulatory sanction, and one unsatisfied tax lien.

Stefan PastorPublic records published by the Financial Industry Regulatory Authority (FINRA) and accessed on May 16, 2018 indicate that former Florida-based Raymond James Financial Services broker/adviser Stefan Pastor, who is involved in a pending customer dispute, was discharged from his former employer in connection to alleged rule violations and is currently not affiliated with any broker-dealer firm. Fitapelli Kurta is interested in hearing from investors who have complaints regarding Mr. Pastor (CRD# 5141819).

Stefan Pastor has spent eleven years in the securities industry and was most recently registered with Raymond James Financial Services in Fort Lauderdale, Florida (2013). He was previously registered with Walnut Street Securities in Fort Lauderdale, Florida (2011-2013) and Ameriprise Financial Services in Plantation, Florida (2006-2011). He has passed two securities industry examinations: Series 66 (Uniform Combined State Law Examination), which he obtained on August 17, 2006, and Series 7 (General Securities Representative Examination), which he obtained on September 6, 2006. He is currently not registered with any state or firm.

According to his BrokerCheck report, he has received one pending customer complaint and was discharged from his former employer in connection to alleged rule violations.

Herbert VossPublicly available records provided by the Financial Industry Regulatory Authority (FINRA) and accessed on May 3, 2018 indicate that California-based StockCross Financial Services broker/adviser Herbert Voss has received resolved or pending customer disputes. Fitapelli Kurta is interested in speaking to investors who have complaints regarding Mr. Voss (CRD# 1014475).

Herbert Voss has spent 33 years in the securities industry and has been registered with StockCross Financial Services in Beverly Hills, California since 2009. Previous registrations include UBS Financial Services in Beverly Hills, California (1998-2009); Waterhouse Securities in Omaha, Nebraska (1997-1998); Kennedy Cabot & Company in Beverly Hills, California (1988-1998); Professional Brokerage Services (1987); Investors Center (1985-1986); J. Alexander Securities (1984-1985); Donald & Company Securities (1985); Kennedy Cabot & Company (1983-1984); and Prudential-Bache Securities (1982-1983) He has passed five securities industry examinations: Series 65 (Uniform Investment Adviser Law Examination), which he obtained on September 30, 1999; Series 63 (Uniform Securities Agent State Law Examination), which he obtained on February 18, 1986; Series 7 (General Securities Representative Examination), which he obtained on March 20, 1982; Series 24 (General Securities Principal Examination), which he obtained on October 31, 1991; and Series 4 (Registered Options Principal Examination), which he obtained on September 26, 1990. He is a registered broker and investment adviser with 15 US states and territories: Arizona, California, Colorado, Illinois, Indiana, Maryland, Massachusetts, Nebraska, Nevada, New Mexico, Oregon, Pennsylvania, South Carolina, Texas, and Washington.

According to his BrokerCheck report, he has received three customer complaints and one pending customer complaint.

Steven FairchildPublicly available records provided by the Financial Industry Regulatory Authority (FINRA) and accessed on April 20, 2018 indicate that California-based LPL Financial Services broker/adviser  has received resolved or pending customer disputes. Fitapelli Kurta is interested in hearing from investors who have complaints regarding Mr. Fairchild (CRD# 849127).

Steven Fairchild has spent 40 years in the securities industry and has been registered with LPL Financial in Folsom, California since November 2017. Previous registrations include National Planning Corporation in Folsom, California (1999-2017); Associated Securities in Boston, Massachusetts (1984-1999); Financial Planners Equity Corporation (1982-1984); and Kidder Peabody & Company (1978-1982). He has passed three securities industry examinations: Series 63 (Uniform Securities Agent State Law Examination), which he obtained on May 24, 1985; Series 7 (General Securities Representative Examination), which he obtained on February 18, 1978; and Series 24 (General Securities Principal Examination), which he obtained on March 24, 1982. He is a registered broker and investment adviser with seventeen US states and territories: Arizona, California, Florida, Hawaii, Idaho, Michigan, Nevada, New York, North Carolina, Ohio, Oklahoma, Oregon, Tennessee, Texas, Utah, Washington, and Wisconsin.

According to his BrokerCheck report, he has received two customer complaints and one pending customer complaint.

James DavisPublicly available records provided by the Financial Industry Regulatory Authority (FINRA) and accessed on April 11, 2018 indicate that California-based Centaurus Financial broker/adviser James Davis has been involved in resolved or pending customer disputes. Fitapelli Kurta is interested in speaking to investors who have complaints regarding Mr. Davis (CRD# 1530880).

James Davis has spent 31 years in the securities industry and has been registered with Centaurus Financial in San Francisco, California since 2006. Previous registrations include Securities America in San Francisco, California (1990-2006); Royal Alliance Associates in Jersey City, New Jersey (1989-1990); Integrated Resources Equity Corporation (1987-1989); Financial Planners Equity Corporation (1986-1987); and Cypress Capital Corporation (1986). He has passed three securities industry examinations: Series 63 (Uniform Securities Agent State Law Examination), which he obtained on March 23, 1987; Series 7 (General Securities Representative Examination), which he obtained on July 19, 1986; and Series 24 (General Securities Principal Examination), which he obtained on April 16, 1987. He is a registered broker and investment adviser with two US states: California and New York.

According to his BrokerCheck report, he has received one customer complaint and one pending customer complaint, and he has been named in an investigation by state regulatory authorities.

 McKinley Mortgage Company

Publicly available records published by the Securities and Exchange Commission (SEC) on March 22, 2018 announce that the SEC reached a settlement of charges against the operators of McKinley Mortgage Company, who allegedly participated in a “years-long scheme to bilk hundreds of investors” out of millions of dollars of funds. Fitapelli Kurta is interested in hearing from investors who have complaints regarding McKinley Mortgage Company.

According to the SEC, the company and its operators—Tobias Preston, Charles Preston, and Caleb Preston—raised an amount exceeding $66 million from around 300 investors, including retail investors. The SEC alleges that they raised these funds by “falsely stating that investments in their fund, Alaska Financial Company III… were secure,” and that the fund generated high returns. In fact, according to the SEC, the fund has for years been insolvent and incapable of meeting interest obligations. The SEC further alleges that though “a portion” of the investors’ funds were used as represented, Tobias Preston used “more than $17 million” to finance “personal businesses and to pay for personal expenses,” while McKinley used another $14 million to fund its operational expenses. According to the SEC, Charles Preston, Caleb Preston, and Laura Sanford, an accounting manager, worked to conceal the fraud “by preparing or distributing investor materials with false information” and keeping other information from the fund’s auditors.

The SEC charged the individuals with violations of anti-fraud and registration provisions of federal securities law, and the defendants agreed to permanent injunctions against future violation of these provisions. According to the SEC, both the Prestons and McKinley agreed to the repayment to AFC III of nearly $30 million in funds they allegedly improperly received, as well as “the appointment of new management at McKinley, AFC III, and their affiliates.” Additionally, Tobias Preston will be subject to an order to return improperly acquired assets as well as a penalty of $2.5 million. Charles Preston and Caleb Preston, per the SEC, have agreed to penalties of $425,000 and $150,000/

George Todd Public records published by the Financial Industry Regulatory Authority (FINRA) and accessed on March 1, 2018 indicate that Tennessee-based Merrill Lynch broker/adviser George Todd has received a pending customer dispute. Fitapelli Kurta is interested in hearing from investors who have complaints regarding Mr. Todd (CRD# 1206553).

George Todd has spent 34 years in the securities industry and has been registered with Merrill Lynch in Germantown, Tennessee since 1983. He has no previous registrations. He has passed four securities industry examinations: Series 65 (Uniform Investment Adviser Law Examination), which he obtained on March 23, 1994; Series 63 (Uniform Securities Agent State Law Examination), which he obtained on January 3, 1984; Series 31 (Futures Managed Funds Examination), which he obtained on June 15, 1983; and Series 7 (General Securities Representative Examination), which he obtained on December 17, 1983. He is a registered broker and investment adviser with 14 US states and territories: Alabama, Arizona, Arkansas, Florida, Georgia, Louisiana, Maryland, Mississippi, Missouri, New Mexico, North Carolina, Pennsylvania, Tennessee, and Texas. His self-regulatory organization (SRO) registrations include BOX Options Exchange LLC, the Chicago Stock Exchange, FINRA, Investors’ Exchange, MIAX PEARL, NYSE American LLC, Nasdaq ISE, and the New York Stock Exchange.

According to his BrokerCheck report, he has received one pending customer complaint.

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