Articles Posted in State Securities Laws

Woodbridge Mortgage Investment Fund of Sherman Oaks, California has been the subject of several regulatory actions concerning allegations that the firm used unlicensed individuals to sell unregistered securities.

On November 1, 2017 the SEC initiated a proceeding to obtain information from Woodbridge Mortgage Investment Fund of Sherman Oaks, California seeking to compel the firm to produce documents as part of an investigation into Woodbridge’s fund raising efforts

The SEC action concerns Woodbridge Mortgage Investment Fund’s conduct in raising over one billion dollars from investors, and whether the offerings were completed using unregistered securities.  The SEC contends that Woodbridge has delayed responding to its prior requests for production of documents and information, necessitating the filing of the action in the Southern District of Florida District Court.

Conestoga Life Settlements Services, Conestoga International, Conestoga Trust and Conestoga Member Services were all named as related entities in a Wisconsin Department of Financial Institutions Division of Securities Cease and Desist Order involving insurance agents Jace  McDonald, Peter Viater and Derek Anderson.

The Order dated May 15, 2015 made findings of fact that  Conestoga Life Settlments had IC agreements with Jace  McDonald, Peter Viater and Derek Anderson whereby they were authorized to sell fractional interests in life insurance policies to Wisconsin residents.

Among the findings were that Jace McDonald put on seminars where he made misrepresentations and misleading statements concerning the Conestoga Life Settlements by comparing them to bank CDs and other statements implying the investors were guaranteed a return on their investments.  These statements were contrary to the risk disclosures in the PPM, which stated that the investments were speculative in nature and did not provide any guarantee.

Ryan Miguel, Infinity Fuels hit with cease and desist order in Arizona.

On April 11, 2017 the Corporation Commissioner for the state of Arizona, acting through the Securities Division issued a cease and desist order against Ryan Miguel, a former registered representative with Merrill Lynch for violations of the Securities Act of Arizona, specifically section 44-1801.  As a result of the cease and desist order Miguel had his license to sell securities in Arizona revoked.

The Securities Divisions’ complaint stems from an investigation into Infinity Fuels, a Nevada Corporation, which issued securities via a non-exempt private placement.  Infinity Fuels was a startup company that purportedly was raising money to develop “waste to fuel” refinery capabilities.  Miguel served as the chief development officer and was on the board of directors for Infinity Fuels.  The Corporation Commissioner also found that Miguel made misstatements of material fact during the sales presentation for Infinity Fuels, which resulted in a customer being misled about the prospects of the company, and the return on the investment.

Marc Sarner of Beacon Financial Advisory Services Hit with Cease and Desist Order by California’s Department of Business Oversight

Marc Sarner BarredOn June 30, 2016 the State of California’s Department of Business Oversight issued a cease and desist order against Marc Sarner of Beacon Financial Advisory Services over allegations he participated in two unqualified offerings of securities to California residents.  The claim relates to the offering of securities in “Image Development” a California company that was issuing bonds in order to purchase distressed real estate, as well as an offering by Usee Corp, a Texas company selling stock and promissory notes to raise money to fund its internet video-phone business.

According to an order issued in December, 2015, Sarner persuaded several of his clients to cash out annuities to purchase Image Development securities which he described as “conservative investments.”  The clients incurred significant surrender penalties when redeeming the annuities.  Sarner also solicited his clients to invest in Usee’s securities for which he received sales commissions of ten percent. Neither Image Development nor Usee were successful ventures, and neither returned the investors’ principal.

Derrick Stephens, D Stephens Management and Consulting, Lola Korneevets Hit with Cease and Desist Order by California’s Department of Business Oversight

Derrick Stephens cease and desistOn June 22, 2016 the State of California’s Department of Business Oversight issued a cease and desist order against Derrick Stephens and D Stephens Management and Consulting over allegations they participated in an unqualified offering of securities to California residents.  Also named in the desist order was Olena Korneevets aka Lola Korneevets.  D Stephens Management and consulting had been the subject of a 2008 desist order issued by the Department of Business Oversight.

The present desist order relates to the offer and sale of investment contracts (securities) with a purported return of over 20%, guaranteed by Stephens.  According to the desist order, the investor was told that the only way he wouldnt get his principal returned was if the entire United States financial system collapsed.  the investor was also not told about the existence of the 2008 desist order, a material omission of fact. The order also alleges that D Stephens Management and Consulting and Derrick Stephens offered and sold unqualified securities, as the investment contracts were neither qualified for sale, nor exempt from qualification.

The State of California stripped Eric Grace of his ability to legally sell investments in California

Eric Grace judgmentOn May 18, 2016 Eric Grace, a former registered representative and investment advisor with Grace Capital Management of Torrance, CA was barred from acting as an investment advisor or broker dealer by the California Department of Business Oversight

The State of California earlier in the year had filed an accusation against Eric Grace, after he refused to provide them information relating to his business with Grace Capital Management.  The state had demanded access to Grace Capital Management’s offices for a routine examination in December, 2015 but found it closed.  They then left voice messages with Grace Capital Management, and sent certified letters, but received no response.

James Duhon and Source Capital Hit with Cease and Desist Order by California’s Department of Business Oversight

James Duhon cease and desistOn October 10, 2016 the State of California’s Department of Business Oversight issued a cease and desist order against Source Capital and James Duhon over allegations they participated in an unqualified offering of securities to California residents.  The claim relates to an offering of securities in oil and gas programs overseen by the Blue Ridge Group, and includes the Belmont Drilling Program, the Galveston Bay Drilling Program and three other oil and gas drilling programs sold by among others, James Duhon and Source Capital.  The order also alleges that Source Capital and James Duhon offered and sold unqualified securities to the public by way of material omissions of fact.

The Commissioner alleges that from September 2010 through November, 2012,  James Duhon and Source Capital sold oil and gas securities to  investors without those securities being qualified for sale, and by way of either material omission of fact or through material omissions, including the rate of return that investors could expect from the programs managed by Blue Ridge Group.  One California based investor was told he could receive his money back any time he asked for it, which the Commissioner found to be materially inaccurate.

Five Star Financial Hit with Cease and Desist Order by California’s Department of Business Oversight

Five Star Financial cease and desistOn August 9, 2016 the State of California’s Department of Business Oversight issued a cease and desist order against Five Star Financial (dba JBAH Insurance Solutions) and its control persons and officers Anna Holt and John Biyikoglu over charges that they sold securities to the public in the form of “JPMorgan Structured Investments” without being registered as a broker dealer, and by way of material ommisions of fact.

The Commissioner’s cease and desist order alleges that in 2014,  Five Star Financial, through its control persons Anna Holt and John Biyikoglu sold JPMorgan Structured Investments to California residents promising a return of between sixteen and twenty percent.  Upon receiving the funds from the investors, the company deposited the funds into an account where they were commingled for non investment purposes such as paying for general operating expenses, paying sales commissions and personal expenses, and repaying investors from other transactions.  The Commissioner further alleges that Biyikoglu told investors that their funds had increased in value, when in fact the money had been spent by Five Star Financial, rather than invested as described to the investors.