Articles Posted in Investigations

Lucia Securities investigation into variable annuity and non-traded REIT sales

The securities attorneys at The Law Office of David Liebrader have opened an investigation into the sale of illiquid and high risk securities by a Henderson, NV based FINRA registered representative with Lucia Securities (aka Lucia Capital Croup).

The pending customer complaint  that gives rise to the investigation concerns a number of high commission variable annuities, as well as high risk, illiquid non traded real estate investment trusts (REITS) including Preferred Apartment Communities Income Fund, and Business Development Corporation of America, high commission illiquid REITs.  The registered representative with Lucia Securities recommended these illiquid, high commission investments that were supposed to provide income, liquidity and a safe return of principal for retirement purposes.  Instead, due to an over concentration into these programs, the customers have been unable to liquidate their holdings, and have suffered substantial unrealized losses.  Among the investments at issue are: Preferred Apartment Communities Income Fund, Business Development Corporation of America and Axa and Metlife variable annuities.

GPB Capital Holdings the subject of regulator complaints

FINRA, the securities industry regulator has opened an investigation into GPB Capital Holdings, a New York based investment firm that has raised nearly $2 billion from investors nationwide through a series of private placements.  This is in addition to an investigation by the Securities and Exchange Commission.  Adding to GPB Capital Holding’s woes, in March, 2019 the firm announced that agents from the FBI made an unannounced trip to its offices as part of their own investigation.

GPB Capital Holding’s private placements were sold by reps from dozens of broker dealers to income starved investors looking to supplement their retirement income. Often omitted in the sales pitch is that these private placements provide huge commissions to the broker, while the investor is left with a high risk, illiquid  investment characterized by high fees and conflicts of interest.

Kalos Capital investigation into non-traded REIT and private placements

The securities attorneys at The Law Office of David Liebrader have opened an investigation into the private placement activity of Kalos Capital, an Alpharetta, Georgia based broker dealer with offices in Las Vegas, Nevada.

The pending customer complaint  that gives rise to the investigation concerns an over concentration into high commission, high risk private placement investments in REITs and oil and gas programs.  Among the investments are GPB Waste Management, Peachtree Hotel Fund, HPI Real Estate Fund, Waveland Resources, the Shopoff Land Fund and GPB Holdings II.  These investments were recommended to an elderly investor as a means of providing income to him in retirement.   Instead, due to an over concentration into these illiquid programs, the client has been unable to liquidate his holdings, and has suffered substantial unrealized losses.  We have previously blogged about Shopoff and GPB Capital Holdings’ issues with regulators.

Roger Owens Cetera Advisors broker Woodbridge Mortgage Fund investigation

The securities attorneys at The Law Office of David Liebrader have opened an investigation into the securities related conduct of Roger Owens a registered representative formerly affiliated with Cetera Advisors in Elkton, Maryland.

The pending investigation concerns investments made by Roger Owens’ clients into the Woodbridge Mortgage Investment Fund.

Jeffrey Schwebach Independant Financial Group broker Woodbridge Mortgage Fund investigation

The securities attorneys at The Law Office of David Liebrader have opened an investigation into the securities related conduct of Jeffrey Schwebach a registered representative formerly affiliated with Independant Financial Group in Dell Rapids, South Dakota.

The pending investigation concerns investments made by clients into the Woodbridge Mortgage Investment Fund, unregistered securities sold by Jeffrey Schwebach to his clients.

Frank Dietrich Quest Capital broker Woodbridge Mortgage Fund investigation

The securities attorneys at The Law Office of David Liebrader have opened an investigation into the securities related conduct of Frank Dietrich a registered representative formerly affiliated with Quest Capital Strategies in Springfield, Virginia.

The pending customer dispute that gives rise to this investigation concerns an investment in Woodbridge Mortgage Investment Fund 4, an unregistered security sold by Frank Dietrich to the Claimant, an elderly retiree.

Shopoff Securities investigated by FINRA; Promissory Notes sold from 2010 to 2017 under review.

On January 10, 2019 FINRA opened a regulatory investigation against Shopoff Securities of Irvine, CA and its principals, William Shopoff and Stephen Shopoff concerning the sale of promissory notes.  FINRA charged that Shopoff Securities sold over $12 million of personally guaranteed promissory notes to 29 investors.

Among the claims made are that the funds raised by Shopoff Securities were used to pay returns to prior investors, and that the transactions were unsuitable for the purchasers.  Using funds raised to repay prior investors could be indicative of a Ponzi scheme.  FINRA Rule 2111 requires that all recommendations to purchase securities made to clients must be suitable.

Patrick Teutonico Network 1 Financial Securities broker excessive trading investigation

The securities attorneys at The Law Office of David Liebrader have opened an investigation into the securities related conduct of Patrick Teutonico a registered representative affiliated with the Network 1 Financial Securities office in Seaford, New York. Mr. Teutonico partnered with Wesley Clinton, another Network 1 broker.

The pending customer dispute that gives rise to this investigation concerns a number of high risk private placements, as well as excessive trading, amounting to nearly 6 times turnover in the account.  Turnover measures the number of times that investment positions in an account are replaced each year.  Industry averages are 1.2 x per year.  In this customer’s case the turnover ratio far exceeded industry standards.  Furthermore, due to the use of margin, or borrowed money the cost to equity ratio in the account was extremely high, meaning the customer needed to generate a 10%+ return in the account just to break even.

Future Income Payments information for investors

In the past several years multiple state finance and securities regulators have filed enforcement actions against Henderson, Nevada based Future Income Payments LLC to stop them from targeting pensioners – many of them military veterans- with a pitch to “cash out” their pensions and receive a lump sum payment.  Some of these pension advance transactions are structured like loans, charging above market rate interest rates.  The decision to sell the rights to a pension at a discount is fraught with perils, and could be one of the worst mistakes a retiree ever makes.

On the other side of the Future Income Payments transaction are investors who were contacted by Registered Investment Advisors or brokers looking for investors to “fund” the “loans” to the Pension recipients.  Investing in these transactions is full of risks, including the lack of transparency, high commissions and fees, and an inability to collect in the event of default.

Sheaff Brock Put Option Income Strategy Caused Losses

The securities attorneys at The Law Office of David Liebrader have opened an investigation into the securities related conduct of Sheaff Brock a registered investment advisor that offered a put option income strategy that it described as a conservative way to earn income.

Sheaff Brock described the program as a conservative “income generator”, which belied the actual risks associated with the strategy that targeted stocks with increased volatility.  Sheaff Brock represented that the strategy would stack small monthly gains from its proprietary strategy, which would amount to a six percent annual return, without incurring substantial risk.