Jade Management may be tied to alleged Success Trade Securities Investment Fraud

The securities fraud complaint and temporary cease-and-desist order (see here for more information) filed against Success Trade Securities by the Financial Industry Regulatory Authority may be the tip of a larger fraud.  Now it appears the NFL Players Association has asked a handful of athletes with investment involving Jade Management to contact the FBI. 

Jade Management may have ties to the fraudulent investments made by NFL and NBA players through Success Trade Securities.  These investments supposedly generated returns between 11 and 26 percent.  Jade Management took $1.25 million in fees from Success Trade Securities through its relationship with the now defamed investment firm headed by Fuad Ahmed. 

Block & Landsman has been representing investors in investment fraud cases since 1994.  During that time we have represented multiple professional athletes, and have been successful in getting investor funds returned in a multitude of cases.  If you believe your investment is at risk because of the actions of Jade Management or Success Trade Securities, we invite you to call us or visit our website for more information.  

FINRA Files Temporary Cease-and-Desist Order against Success Trade Securities

The Financial Industry Regulatory Authority (“FINRA”) has filed a Temporary Cease-and-Desist Order (“the Order”) against Washington, D.C.-based Success Trade Securities.  Fuad Ahmed, Success Trade Securities CEO and President, was also named in the Order.  The Order seeks to halt fraudulent activities and the misuse of investors’ funds and assets.  The Order freezes all activities at Success Trade Securities.

In addition to the Order, FINRA filed a complaint against Success Trade Securities and Ahmed, alleging securities fraud violation.  The charges include fraud in the sales of promissory notes issued by the firm’s parent company, Success Trade, Inc.  Many targets of this alleged fraud were National Football League ("NFL") and National Basketball Association ("NBA") player.

The complaint alleges Ahmed and Success Trade Securities sold more than $18 million in Success Trade promissory notes to 58 investors, but made misrepresentations and omitted material facts.  The misrepresentations and omissions include:

1.  Misrepresenting the amount of money sought in the offering;
2. Omitting the amount of the company’s existing debt to investors;
3. Omitting the company was unable to make future interest payments without raising money from new investors;
4. Misrepresenting the rate of return and exempt status of the private placement; and
5. Misrepresenting the way investor funds would be used.

FINRA alleges Success Trade Securities used the funds to make unsecured loans to Ahmed and interest payments to existing note holders.

Allegations of Securities Fraud Result in Indictments for four DBSI Inc. Executives

A federal grand jury in Idaho indicted four top executives of DBSI Inc. on Wednesday alleging securities fraud violations.  The charges, 83 in all, include conspiracy to commit securities fraud, mail fraud, interstate transportation of stolen property, and wire fraud. 

Assistant U.S. Attorney Wendy Olson announced the indictment against Douglas Swenson, founder and president of DBSI Inc.  Swenson was indicted along with DBSI’s general counsel, Mark Ellison, and two assistant secretaries, David Swenson and Jeremy Swenson.

Olson was quoted as saying, “investment fraud undermines markets, bilks investors of promised returns and creates unnecessary loss at a time when our economy is struggling to recover.”

The U.S. Attorney alleges the executives orchestrated a scheme to misled investors throughout the U.S. by suggesting DBSI was a profitable company with a net worth over $100 million, when in reality it was floundering.  Instead of using new investor funds legitimately, Olson charges DBSI executives were using the funds to pay returns to other DBSI investors. 

In addition to the four executives indicted Wednesday, another former DBSI executive, Gary Bringhurst, pled guilty to similar charges after reaching a plea deal.

DBSI, which was founded in 1979, used many investment strategies, including tenant-in-common (“TICs”).  TICs allow multiple investors to become fractional owners of a property.  At its peak, DBSI managed over 20 commercial properties across the United States and had more than 8,000 investors.  The company declared bankruptcy in 2008.  

Mary Jo White Sworn in as New SEC Chair

The Securities and Exchange Commission (“SEC”) announced today Mary Jo White was sworn in as its 31^st Chair.  Chairman White comes to the SEC after having spent years prosecuting securities and financial institution frauds and international terrorism cases as U.S. Attorney for the Southern District of New York from 1992 to 2002.  Afterwards, she was a partner at the law firm of Debevoise & Plimpton LLP in New York.

“It is an honor to lead the talented and dedicated SEC staff on behalf of America’s investors and markets,” stated Chairman White.  “Our markets are the envy of the world precisely because of the SEC’s work effectively regulating the markets, requiring comprehensive disclosure, and vigorously enforcing the securities laws.”

Chairman White’s predecessor, Mary Schapiro, served as SEC Chairman during a turbulent time, beginning in early 2009.  It remains to be seen if Chairman White while use her prosecutorial past as a means to further reshape and enforce U.S. securities law.

Missouri takes New Approach to Morgan Keegan Alleged Securities Fraud in Mamtek Bonds

Missouri Secretary of State Jason Kander issued a press release Thursday regarding failed artificial sweetener manufacturer Mamtek.  In the release, available here, Kander announced a cease-and-desist order against Morgan Keegan & Co. Inc., the underwriter for bonds issued for a Mamtek project to build a sucralose manufacturing facility in Moberly, Missouri.

This recent approach by Kander to recoup funds for investors alleges that Morgan Keegan did not complete adequate due diligence on the project prior to underwriting the bond issue.  “"If Morgan Keegan had done its due diligence and investigated the feasibility of Mamtek's business plan we would not be here today," Kander said at a news conference in St. Louis. "This is unacceptable."

The city of Moberly issued over $30 million in bonds to fund construction of the plant.  The project was derailed when the first principal payment on the bond was missed.  Now the incomplete factory serves as a reminder of the 600 jobs that never materialized, and a loss for investors all of the U.S. 

The failed project made headlines last year when Mamtek CEO Bruce Cole was charged with securities fraud by the Securities and Exchange Commission (“SEC”).  The SEC complaint against Cole may be viewed by clicking here.  These charges are in addition to the criminal charges Cole faces in Missouri related to Mamtek’s failed project.

It remains to be seen if Kander will be able to recoup anything, as investors who lost millions continue to seek ways to recoup from Morgan Keegan’s alleged lack of due diligence in this bond issue.

Please contact Block & Landsman if you invested in Mamtek bonds so we may discuss potential legal options with you.

Block & Landsman Represents Clients Defrauded by Results One Adviser Steven Salutric

Block & Landsman is currently prosecuting a securities fraud lawsuit arising out of a fraudulent investment scheme that has been the target of the Securities and Exchange Commission. In July, 2012, the SEC imposed sanctions against Charles Rizzo and Gina Hornbogen, the owners of Results One Financial, LLC, for their failure to supervise adviser Steven Salutric after he misappropriated $7 million from fifteen clients. The SEC Order can be viewed here.

Salutric was employed by Results One Financial, which held client funds and securities at Charles Schwab & Co. Between 2002 and 2009, Salutric's fraudulent scheme involved his diversion of millions of dollars from the Schwab accounts by forging client signatures on wire transfer requests, which Schwab honored. In 2005, Schwab itself was sanctioned by the New York Stock Exchange for failing to properly supervise client accounts managed by such independent investment advisers who engaged in the same type of fraud.

If you believe you have been defrauded by Results One Financial, or if you believe that Charles Schwab & Co. failed to properly protect your accounts from fraudulent withdrawals, you may have a right to recover your losses. Please contact the securities fraud attorneys at Block & Landsman to discuss your case. 

Indiana Resident Thomas Redmond Charged by Prosecutors with Defrauding Elderly Investors

Thomas Redmond, a Carmel resident, was charged by Marion County prosecutors of defrauding elderly victims out of $580,000 through a financial fraud scheme. Adding insult to injury, Redmond apparently met his victims through a local church, and used his religious conviction to persuade investors to purchase securities products through him.

As reported by the NBC News, Marion County, Indiana Prosecutor Terry Curry filed securities fraud charges against Redmond. As stated by Prosecutor Curry, "The damage caused by scam artists is permanent and devastating, and this case illustrates again why we must vigorously pursue those who prey upon vulnerable victims.” The Financial Industry Regulatory Authority (“FINRA”) permanently barred Redmond from selling securities in 2011; however, he apparently continued the scheme up until his last employer, Provident Capital Management, fired him in 2012.

Based on an investigation, prosecutors believe investors’ funds were never invested, but rather, were misappropriated by Redmond into his personal accounts. Many of his victims appear to be church members who counseled Auschwitz survivors for years. This case is yet another example of unscrupulous individuals taking advantage of vulnerable segments of society.

The scheme employed by Redmond, was perpetrated while he was a broker-dealer for Faith Financial Planners, Velocity Wealth Management, and Provident Capital Management Inc., and reportedly began in 2004. It appears Redmond went so far as to fabricate fake financial statements and updates to clients.

If you believe you may have been a victim of Redmond’s scheme, please contact Block& Landsman so we may discuss potential legal options with you.