Wall Street Investment Fraud Lawyer Blog

FINRA Warns of Social Media-Linked Investment Schemes

Wed, 18 Aug 2010 11:02:02 -0500

The Financial Industry Regulatory Authority (FINRA) has issued a warning to investors regarding high-yield investment programs (HYIPs), which are Internet-based Ponzi schemes. These HYIPs claim to offer extraordinary returns of 20% to 100% or even more per day. FINRA warns that these HYIPs are unregistered investments that are being sold by unlicensed individuals.

FINRA advises that these investments are scams that are being promoted via social media, including Facebook, Twitter, and YouTube. Investors are unfortunately convinced that these investments are legitimate by the sophisticated promotions by the scammers.

Unfortunately, the number of HYIP scams is growing significantly. The Federal Bureau of Investigations (FBI) says that the number of new HYIP investigations grew more than 100% from 2008 - 2009. Further, these HYIPs are occurring worldwide. A recent scheme, Pathway to Prosperity, allegedly defrauded 40,000 individuals in 120 countries of $70 million.

FINRA warns that these HYIP schemes are merely Ponzi schemes. In fact, FINRA Senior Vice President John Gannon, explains that "some of these schemes encourage people to bring in new victims, while others entice investors to 'ride the Ponzi' by attempting to get in and get out before the scheme collapses." Further, many of the fraudsters pay current investors bonuses, of up to 25%, for referring new recruits or victims.

In conclusion, beware of fancy unsolicited or solicited investment promotionals. Make sure you always thoroughly research any investments and be especially skeptical of promises of high returns. Often the promise of a high return, is the first sign that an investment is a scam.

For more information regarding investment fraud, please visit our website at www.dossfirm.com or contact one of our attorneys for a free consultation.

FINRA Warns of Oil Spill Stock Scams

Tue, 17 Aug 2010 10:58:04 -0500

FINRA has joined with the SEC issuing an alert warning investors of scams that are exploiting the oil spill in the gulf. Scammers are "promising financial gains from investments in companies that claim to be involved in cleanup operations."

Along with the warning, FINRA provides several tips to avoid these type of scams. First, FINRA suggests that you thoroughly investigate a company or individual before investing. Unfortunately, individuals rely on information that comes in an unsolicited correspondence sent via facsimile, email or even text message. This information often contains misrepresentations and glorified claims regarding the company's revenues, profits, contracts, or future stock price. FINRA suggests reading the fine print and finding out who sent the information. Do your research and do not rely solely on unsolicited information.

Second, FINRA advises that you should find out where the stock trades. Many of these unsolicited recommendations "involve stocks that do not meet the listing requirements of the major stock exchanges." Rather, they are often quoted on the OTC Bulletin or in the Pink Sheets. In that case, there do not exist minimum qualitative standards and likely trade infrequently, which may make it more difficult to sell any shares that you acquire. Further, when these type of shares do trade they often experience rapid price changes.

In addition, you should consider a company's SEC filings. You can check a company's filings in the SEC's EDGAR database. Be aware, however, that just because a company has made filings with the SEC it doesn't mean that investing in the company is a good idea.

Finally, use common sense and be skeptical. Remember if it is too good to be true it likely is. Look past the pitches and the theatrics and ask serious questions regarding the investment. Make sure that you also do independent research, looking beyond the salesperson and company for information regarding the investment. Also, take extra care where the investment allows immediate pay-offs, especially when the company is in its start-up phase or the service provided is still in development.

Unfortunately, scammers are often really good at promoting their "investments." Remember this is your hard earned money and don't ever invest in something that you haven't thoroughly researched.

If you believe that you are a victim of investment fraud and would like information about your legal rights, please call our firm for a free consultation.

Elder Investment Fraud and Financial Exploitation Project: A Futile Effort To Stop Elderly Financial Abuse

Wed, 14 Jul 2010 11:00:09 -0500

According to the Washington Post, one out of five Americans above 65 has been the victim of a financial scheme. Elder fraud is so rampant that each year money stolen from seniors adds up to more than $2.6 billion. Statistics also show that more than a third of elderly individuals over seventy have some sort of memory disorder, which explains why the unscrupulous take advantage of this segment of the population. As a result, several governmental organizations joined forces to create the Elderly Investment Fraud and Financial Exploitation Project. The organizations involved include the North American Securities Administrators Association, the National Adult Protective Services Association, the American Academy of Family Physicians, the National Area Health Education Center Organization and the National Association of Geriatric Education Centers.

What the article does not discuss is that there are already plenty of regulators that are supposed to be stopping financial fraud. The problem is that they are failing miserably at their jobs due to budget shortfalls and/or a lack of the investment knowledge necessary to keep up with the criminal segment of the population. Unfortunately, the Elderly Investment Fraud and Financial Exploitation Project as a group likely will not be any more successful than their individual counterparts are at stopping financial fraud.

We find it particularly interesting that there does not appear to be a single organization from the private sector participating in this project. Indeed, there are organizations out there that have a financial interest in stopping financial fraud. For example, the Public Investor Arbitration Bar Association (PIABA), a non-profit organization made up of attorneys who represent investors to recover investment losses, would be a great asset to such a project. These are the types of organizations that should be included in finding ways to solve these problems, not more overworked and under paid government employees who will ultimately do nothing to help these aggreived investors recover their losses.

The Doss Firm Quoted In On Wall Street Regarding FINRA Barring Ex-ING Broker Michael J. Dimare

Thu, 13 May 2010 14:01:41 -0500

The financial publication On Wall Street published an article today discussing the fate of Michael Dimare, a former ING Financial broker who was recently permanantly barred by securities regulator FINRA for scamming approximately 22 victims out of approximately $2 million between 2001 and 2008.

Accoding to Dimare's CRD report, a report that tracks customer complaints made by customers and securities regulators, ING Financial has compensated some investors who have come forward. In the article, Jason Doss, an attorney with The Doss Firm was quoted, "The question is whether everyone will come forward."

FINRA's investigation uncovered that between 2001 and 2008, Dimare persuaded his clients to invest in fictitious investments. Between 2001 and 2006, Dimare was a sales manager for John Hancock Mutual Life Insurance Company. During that time period, victims wrote checks made payable to John Hancock believing that the money would be invested. In reality, Dimare deposited the funds into his own bank account.

Between 2006 and 2008, Dimare was a registered representative of ING Financial Partners. During this time period, it appears that Dimare continued to encourage his clients to write checks made payable to John Hancock and then deposited the funds into his bank account.

Victims who lost money prior to 2006 likely have legal claims that can be brought against John Hancock for failure to supervise as well as the depositary bank who accepted the checks for deposit for conversion. Victims who lost money between 2006 and 2008 likely have claims against ING Financial Partners and the depositary bank.

For more information, feel free to contact us for a free consultation.

FINRA Bars Former ING Financial Broker Michael J. Dimare From Ponta Vedra Beach, Florida For Running A Ponzi Scheme

Wed, 12 May 2010 13:51:13 -0500

FINRA anounced yesterday that it permanantly barred former ING Financial broker, Michael Dimare, from Ponta Vedra Beach, Florida for scamming approximately 22 victims out of approximately $2 million between 2001 and 2008.

For more information, feel free to contact us for a free consultation.

The Doss Firm Investigates Red Box Movie Rentals For Overcharging Customers

Mon, 03 May 2010 20:55:31 -0500

CBS Atlanta News reported today that customers who rent movies from Red Box in the Atlanta area are complaining of being overcharged. According to the report, Red Box charges a dollar a night with no late fees but some customers are complaining that they were charged over a hundred dollars by the time they were through dealing with the company. The primary complaint is that the company continues to charge customers even after the movies are returned.

If you were overcharged by Red Box, please contact us for a free consultation. The Doss Firm, LLC is a law firm that is devoted to protecting the rights of consumers.

Warning: Estate Planning Seminars Used to Scam Retirees

Wed, 17 Mar 2010 12:05:21 -0500

According to the Securities and Exchange Commission (SEC), USA Retirement Management Services (USARMS), managed by Francios E. Durmaz and Robert C. Pribilski, used estate planning seminars to perpetuate a Ponzi scheme. The SEC alleges that Durmaz and Pribilski, through mass mailings, invited retirees to attend estate planning seminars and then conned them into purchasing USARMS promissory notes. It is alleged that these individuals then convinced investors to purchase purported Turkish investments.

In total, it is believed that USARMS raised $20 million dollars from over 120 individual investors. Unfortunately, however, the SEC claims that the money was not invested in the "Turkish Eurobonds," which were touted by Durmaz and Pribilski as safe, guaranteed investments. The SEC alleges that the money was paid to earlier investors as "returns" in a ponzi scheme fashion and misused to finance Durmaz and Pribilski's luxurious lifestyles and other businesses.

The SEC has obtained an emergency court order to shut down this scheme. In the SEC's complaint it is alleged that Durmaz and other USARMS employees would give a basic estate planning seminar and then follow-up with the retirees by letter providing them with the opportunity for a personal meeting to discuss setting up a living trust or will. The SEC says that once the retiree came to their offices, Durmaz would review the individual's personal finances and begin the hard sell of these promissory notes. Durmaz would allegedly falsely boast of holding a Masters in Business Administration (MBA) and that he was a Certified Senior Advisor. This gave investors a sense of security as they believed that they were dealing with an educated individual with expert knowledge in retiree issues.

The assets of the defendants have been frozen by the District Judge for the Central District of California. Further, the defendants are enjoined from future violations of the antifraud provisions.

Unfortunately, investors should always be cautious when attending any type of seminar regarding investments. There are individuals who use these seminars to gain the trust of investors and then take advantage of the trust and perpetrate a fraud. Prior to purchasing any investment, do your homework and make sure you independently verify any promises by the person/company selling the investment.

Do you believe that you have been a victim of an investment scheme? Please contact our firm for a free consultation to discuss your legal rights. For further information about our firm, please visit our website www.dossfirm.com.

Georgia Supreme Court Rules Against Georgia Natural Gas

Mon, 15 Mar 2010 14:22:18 -0500

The Doss Firm is pleased to announce a favorable decision issued by the Georgia Supreme Court in a pending case against Georgia Natural Gas. Our firm, along with the firm of Strickland Brockington & Lewis, represent Charles Ellison and Susan Bresler who filed a class action lawsuit against Southstar Energy Services, LLC d/b/a Georgia Natural Gas seeking to recover overpayments and other damages arising from their violations of Georgia's Natural Gas Act. In summary, Plaintiffs allege that Georgia Natural Gas has overcharged customers for both natural gas and for customer service charges.

Georgia Natural Gas filed a motion to dismiss with the trial court, arguing that the claims were barred by the voluntary payment doctrine. The voluntary payment doctrine provides that "Payments of claims made through ignorance of the law or where all the facts are known and there is no misplaced confidence and no artifice, deception, or fraudulent practice used by the other party are deemed voluntary and cannot be recovered unless made under an urgent and immediate necessity therefor or to release person or property from detention or to prevent an immediate seizure of person or property." O.C.G.A. 13-1-13. In sum, the voluntary payment doctrine prevents individuals who have made an overpayment from recovering monies overpaid, unless they show an exception as outlined above.

The trial court dismissed the complaint pursuant to the voluntary payment doctrine. However, the Court of Appeals reversed the trial court's ruling. Georgia Natural Gas appealed again arguing that the plaintiffs are precluded from recovery of overcharges, pursuant to the voluntary payment doctrine, as a result of "voluntary" payment of their bills.

The Georgia Supreme Court has affirmed the Court of Appeals decision, concluding that the Georgia Natural Gas Act, which has the clear purpose of protecting natural gas consumers, provides a private right of action for damages, thus removing the voluntary payment doctrine as a defense. Therefore, our clients may proceed with their lawsuit against Georgia Natural Gas for overcharging customers for both natural gas and customer service charges.

The Doss Firm, LLC Sues Ameriprise Over Unsuitable Sales of Reverse Convertible Notes To Elderly Couple

Tue, 23 Feb 2010 18:00:10 -0500

On February 16, 2010, Financial Industry Regulatory Authority (FINRA) fined H&R Block Financial Advisors, Inc., (n/k/a Ameriprise Financial) $200,000 for failing to establish adequate supervisory systems and procedures for supervising sales of a unique and relatively new investment called reverse convertible notes to retail customers. FINRA also fined and suspended H&R Block broker Andrew MacGill, a Tampa-based financial advisor, for making unsuitable sales of reverse convertible notes to a retired couple. The firm was ordered to pay $75,000 in restitution to the couple for losses they incurred.

The Doss Firm, LLC, a law firm that focuses on representing investors against financial firms like Ameriprise Financial, may have uncovered that the circumstances surrounding Andrew MacGill's suspension and Ameriprises's $200,000 fine is not an isolated incident. The problem is regional, if not firm-wide and involves Ameriprise's financial advisors targeting senior citizens to purchase high-risk reverse convertible notes. These products are sold to investors as safe cash-alternative investments.

Today, the law firm filed suit on behalf of an elderly couple from Sun City Center, Florida (80 years old and 75 years old), who claim that they also were victimized by H&R Block Financial Advisors, Inc./Ameriprise Financial in connection with sale of reverse convertible notes. The elderly couple opened accounts at the firm after attending a free lunch seminar sponsored by H&R Block at an upscale restaurant in Apollo Beach, Florida.

In the press release announcing the fine and suspension, FINRA Chairman and CEO Richard Ketchum stated, "For the typical retail investor, for instance, it would be unwise to put anything more than a small portion of life savings into riskier structured products such as reverse convertible notes." In the case filed today, at one point over 40% of the elderly couples retirement accounts were invested in reverse convertible notes.

What is a reverse convertible note?

A reverse convertible note (RCN) is a structured product that typically consists of a high-yield, short-term note of an issuer and effectively a put option that is linked to the performance of an unrelated, or "linked," asset - usually a single common stock, but sometimes a basket of stocks, an index or some other asset. As a general rule, upon maturity of an RCN, the investor will receive either his full principal investment or a predetermined number of shares of the linked equity (which may be worth less than the principal investment), depending on the performance of the linked equity. Generally speaking, the higher the coupon rate, the higher the expected volatility of the linked equity and the greater the likelihood of the investment resulting in payment of shares. Reverse convertibles not only come with the risks that fixed income products ordinarily carry, such as issuer default and inflation risk, but with additional risks of the underlying asset, which can depreciate or even become worthless. The initial investment for most RCNs is $1,000 per unit and most RCNs have maturity dates ranging from three months to one year.

In the enforcement matter against Ameriprise, FINRA found that during the period from January 2004 through December 2007, H&R Block engaged in sales of RCNs without having a system or procedures in place to effectively monitor customer accounts for potential over-concentrations in RCNs. As a result, the firm failed to detect and respond to indications of potential over-concentration in RCNs in numerous customer accounts.

FINRA found that H&R Block utilized an automated surveillance system to facilitate its suitability review of securities transactions and to monitor customer accounts for potentially unsuitable positions and activity. The system would flag for review any transaction or account meeting certain parameters established by the firm relating to, for example, account turnover and concentration levels in a particular security or class of security. The firm's system, however, was not configured or designed to monitor RCN transactions or RCN positions in customer accounts and the firm did not establish an effective alternative means to do so. As a result, H&R Block failed to detect and respond to indications of potentially unsuitable RCN concentration levels in numerous customer accounts. Additionally, the firm failed to provide sufficient guidance to its supervising managers on how to assess suitability in connection with their brokers' recommendation of RCNs.

Former Merrill Lynch Financial Adviser Pleads Guilty In Investment Scheme

Tue, 23 Feb 2010 10:21:50 -0500

According to The Star-Ledger, Stephen Severio, a former Merrill Lynch financial adviser has plead guilty to two counts of theft by deception and to commercial bribery relating to a scheme that netted nearly $700,000. Severio admitted to the court that he had convinced 31 long-term clients of Merrill Lynch to withdraw their money from their Merrill Lynch accounts and invest their money in other opportunities outside of Merrill Lynch. This practice is called "selling away" and violates Merrill Lynch policy as well as industry standards. Some of the Severio's victims had been clients of Severio's at Morgan Stanley. Severio had been an employee at Merill Lynch's Red Bank office for five years.

In an effort to persuade these clients, Severio promised returns of between 15 and 20 percent. Rather than investing the funds he received, Severio merely cashed the checks and used the money as he pleased. Authorities alleged that the scam ran more than a year and that the money was used to support a drug habit. Although the details are not clear as to exactly where the money went, police records indicate that Severio along with two 21 year-old women were arrested in July of 2008 on charges of possession of cocaine.

The prosecutor will recommend a seven-year prison term in exchange for Severio's plea. Additionally, Severio has agreed to a civil consent judgment to repay the victims
$685,653.

The Doss Firm, LLC Is Investigating Claims Against Ameriprise Financial f/k/a H&R Block Financial Advisors For Unlawful Sales of Reverse Convertible Notes

Fri, 19 Feb 2010 15:05:57 -0500

The Doss Firm, LLC is currently investigating whether Ameriprise Financial f/k/a H&R Block Financial Advisors violated industry rules on a wide-spread basis in connection with the unsuitable sale of reverse convertible notes to senior citizens.

FINRA fined the firm as well as Andrew MacGill, a broker with the firm, this week for making unsuitable sales of reverse convertible notes to a senior couple. Andrew MacGill practices out of Tampa, Florida. The Doss Firm, LLC has been retained by other Ameriprise clients who are complaining they too were sold reverse convertible notes.

Reverse convertible notes are inherently very risky investments. Unfortunately, in many instances they were sold as safe income-producing alternative investments, which is why FINRA has taken action against H&R Block Financial Advisors.

A reverse convertible note is a type of structured product. According to Notice To Members ("NTM") 05-59, structured products are securities created by investment banks that are derived from or based on a single security, a basket of securities, an index, a debt issuance, and/or foreign currency. As such, these investments come in many shapes and sizes.

Most structured products pay an interest or coupon rate substantially above the prevailing market rate. Structured products also frequently cap or limit the upside participation in the referenced asset. These unique financial instruments are typically issued by investment banks or their affiliates and have a fixed maturity date. Some structured products are listed on a national securities exchange and some are not. Because they are so unique, however, even those listed on a national exchange are thinly traded.

As a result, once an investor purchases such an investment, it is difficult to get out of it prior to the maturity date without suffering a substantial penalty. Structured products typically have two components - a note and a derivative (often an option). The note pays interest to the individual at a specified rate and interval. The derivative component or option component establishes the payment upon maturity.

Most reverse convertibles sold to consumer are linked to a single stock in a household name company (e.g. Jet Blue, Norfolk Southern, Lowes and Bristol Myers to name a few.) Prior to the maturity date, which was typically only a few months, investors receive interest payments at a rate that is higher than the prevailing market rate. Importantly, the reverse convertible notes do not allow investors to participate in any upside in the referenced underlying stock. Investors fully participate, however, in all downside market risk of that stock, because upon maturity (i.e. at the expiration of the option), if the price per share of the underlying stock falls below a predetermined value, the note converts into shares of underlying common stock at the eroded price per share. In other words, in exchange for receiving some income, investors risk losing some or all of their principal investment by assuming all of the downside risk of the underlying stock and by giving up all of the upside potential.

If you believe you have been sold unsuitable reverse convertible notes and suffered losses, you may have a claim to recover damages. Please contact The Doss Firm, LLC at 770-578-1314.

FINRA Fines H&R Block Financial Advisors n/k/a Ameriprise Financial and Andrew MacGill In Connection With Improper Sales of Reverse Convertible Notes

Wed, 17 Feb 2010 14:23:25 -0500

FINRA, Financial Industry Regulatory Authority announced that it was fining H&R Block Financial Advisors, Inc. (n/k/a Ameriprise Advisor Services, Inc.) $200,000 for failing to establish adequate supervisory procedures in connection with the sale of reverse convertible notes. FINRA also fined Andrew MacGill, an advisor of the firm for making unsuitable recommendations to a retired couple.

FINRA also released an Investor Alert, Reverse Convertibles - Complex Investment Vehicles, to educate consumers about these complex structured products. FINRA also issued Regulatory Notice 10-09, reminding firms of their sales practice obligations when recommending or selling reverse convertible notes.

These are inherently very risky investments. Unfortunately, in many instances they were sold as safe income-producing alternative investments, which is why FINRA has taken action.

If you were sold reverse convertible notes and lost money you may legal rights to recover your losses. Please call The Doss Firm, LLC for a free consultation.

Michael Joseph Dimare formerly with ING Financial Partners Pleads Guilty To Ponzi Scheme Fraud

Wed, 10 Feb 2010 15:20:15 -0500

According to First Coast News in Ponte Vedra, Florida, Michael Joseph Dimare pleaded guilty to mail fraud Monday for scamming about 22 people out of approximately $2 million. He worked as a registered representative of ING Financial Partners from October 2006 to May 2008. Based on the article, it appears that Mr. Dimare engaged in the ponzi scheme fraud while he was with ING Financial Partners and the firm he worked with before ING, Signator Investors, Inc. According to Mr. Dimare's CRD report, a publicly available report that tracks customer complaints against financial advisors, it appears that only 11 customers have filed complaints thus far. One of the victims came forward in the article and stated that she received every penny of her money back from a financial firm. That firm is likely ING Financial Partners and/or Signator Investors, Inc.

Given that he pleaded guilty to defrauding 22 people, there are likely more victims who have not come forward yet.

The Doss Firm, LLC represents investors across the nation against financial firms and seeks to recover investment losses that result from fraud. If you believe you have been defrauded by Mr. Dimare, feel free to contact us.

Rhea Dignam Named As Head of SEC's Atlanta Regional Office

Wed, 10 Feb 2010 14:50:52 -0500

According to an article in today's Atlanta Journal Constitution, Rhea Dignam was named the regional chief for the Securities Exchange Commission. Ms. Dignam will be working from the Atlanta-based regional office and she will oversee the office's enforcement and examination activities for the five-state region of the Southeast. According to the article, she is replacing Katherine Addelman, who left the position to enter private practice.

Stuart Title Guaranty Accused By Georgia Insurance Regulators of Bilking Consumers

Tue, 09 Feb 2010 12:32:27 -0500

Virtually every homeowner purchases title insurance when they buy a home. Stuart Title Guaranty is one of the nation's largest providers of title insurance. According to a recent Atlanta Journal Constitution article entitled Title insurance company accused of overcharging, the Georgia Department of Insurance filed a regulatory action against the company alleging that Stuart Title Guaranty violated Georgia law more than 600,000 times between 2003 through 2007. The Department alleged that the violations caused consumers to pay more than they should have for title insurance. Specifically, the Department alleged that Stuart illegally permitted closing attorneys to charge what ever they wanted to charge. The company also permitted agents to charge consumers with the same risk profiles different premium amounts. The formal adminstrative hearing is scheduled to begin sometime in February. The article also stated that the average overcharge was about $200 per consumer.

Even though the overcharge amount per individual is small, collectively it amounts to a lot. If you are a customer of Stuart Title Guaranty, you have legal rights to collect for the overcharges. Most likely, the best way to proceed against the company is on a class-wide basis.

The Doss Firm, LLC has handled mutiple large class actions on behalf of Georgia consumers. Please feel free to contact us if you feel that you have been aggrieved.