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.

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. 

Ameriprise and Affiliated Clearing Firm Fined for Failing to Supervise Transfer of Customer Funds

The Financial Industry Regulatory Authority (“FINRA”) announced a fine of $750,000 against Ameriprise Financial Services, Inc (“Ameriprise”) and its affiliated clearing firm, Ameriprise Enterprise Investment Services, Inc. (“AEIS”).  The fine was levied against the firms “for failing to have reasonable supervisory systems in place to monitor wire transfer request.”   Though the fine relates to a compliance issue, the circumstances uncovering the supervisory issues involved an investment fraud perpetrated by an Ameriprise representative, Jennifer Guelinas. 

Guelinas, who is now barred from the securities industry (click here for more info), defrauded investors through a series of fraudulent transfers from clients’ accounts to accounts controlled by her.  This scheme took place from December of 2006 until October of 2010, during which time Guelinas converted over $500,000 from clients’ brokerage accounts.  Sadly, the three clients involved in this securities fraud were senior citizens. 

While neither affirming nor denying the charges, Ameriprise and AEIS consented to FINRA’s finding of failure at the firms to detect multiple red flags concerning Guelinas.  As stated by Brad Bennett, Executive Vice President and Chief of Enforcement at FINRA, "Ameriprise and its affiliated clearing firm missed numerous supervisory red flags, including the fact that two of the wire transfers went to accounts in Guelinas' name. Firms must have robust supervisory systems to monitor and protect the movement of customer funds."

This fraudulent arrangement was only possible because of Ameriprise’s failure to detect this long-operating scheme.  Altogether, Guelinas forged the signatures of her clients over 80 times on wire transfer requests.  This is in addition to forging clients’ signatures on three real estate closing agreements and one promissory note.

Adviser Jeffrey Rubin of Pro Sports Financial Banned from Securities Industry

The Financial Industry Regulatory Authority (“FINRA”) announced yesterday it has barred Jeffrey Rubin, a Florida resident, from selling securities for his unsuitable recommendations to customers. 

Rubin, who operated Pro Sports Financial, a concierge services company for professional athletes, has also been affiliated with Lincoln Financial Advisors and Alterna Capital Corporation.  Starting in at least 2006, Rubin used his position of authority to induce a client, a NFL player, to invest $3.5 million in four high-risk securities.  The largest single investment, $2 million, was invested in an Alabama casino project.  However, what started out with one investor quickly grew to over 30 additional clients of Rubin with investments totaling approximately $40 million in the casino project.

The casino project, however, was mired in regulatory issues, and was effectively shut down shortly after it began operations.  Rubin’s clients who invested in this project, all former and current NFL players, lost millions, while Rubin received a 4% ownership stake and approximately $500,000 from the casino project promoter for his referrals.

In settling the matter, Rubin neither admitted nor denied charges, however, he is barred from the securities industry.  If you believe you have lost money because of the actions of Jeffrey Rubin, please contact Block & Landsman to discuss your potential legal options.

The Epidemic of Financial Abuse Against The Elderly in the United States

Senior citizens deserved to be protected against financial scams. And, like anybody who has been victimized by investment fraud, the elderly need the people who care for them to ensure that our nation's elderly do not have to deal with the devastating consequences caused by fraud. A pilot project initiated by Baylor College of Medicine trained physicians to detect elderly patients who were victims fo financial fraud and report their concerns to the state securities department. The project uncovered several instances of fraud, including one Ponzi scheme that raised $10 million from 130 investors and which resulted in a conviction for that fraudster

Mickey Rooney, the 90 year old legend who starred in more than 200 movies, exposed painful and embarrassing details of his personal life when he testified before a Senate panel that he was the victim of financial abuse. Rooney's testimony was offered in support of pending legislation called the Elder Abuse Victims Act, which would establish an Office of Elder Justice within the Department of Justice.

Financial abuse of senior citizens is serious problem. According to a study by Duke University, nearly 9 million Americans over the age of 71 are susceptible to financial exploitation because of cognitive difficulties ranging from mild impairment to Alzheimer's disease. Indeed, according to a wide-ranging study by the Investor Protection Trust ("IPT"), one in five elderly U.S. citizens have been victims of fraud.

The exploitation of seniors who are vulnerable to financial fraud is made more likely because the people closest to these victims -- their adult children -- are unaware of the dangers to their parents. For example, the IPT study found that 37% of elderly Americans are solicited to buy into one of several financial schemes. Yet, only 19% of all adult children believe that their elderly parents are the targets of fraudsters. In addition, only 5% of adult children who speak with their parents' physicians said that the healthcare providers expressed concern regarding their parents' ability to handle their own money. In contrast, nearly 20% of these same physicians reportedly raised concerns with these adult children about their parents' mental comprehension.

The combination of vulnerability and lack of family appreciation of the danger of elder financial abuse fuels the efforts of scam artists to target senior citizens. In response to this looming danger, the North American Securities Administrators Association ("NASAA"), in cooperation with IPT and various medical associations across the country, created the "Elder Investment Fraud and Financial Exploitation" prevention campaign intended to education medical professionals to identify seniors who are vulnerable to financial fraud and to refer suspected victims to the appropriate state securities departments. This program deserves the whole-hearted support of the medical community, securities regulators across the country, and family members of the elderly.

Targets of Investment Fraud: Professional Athletes

Professional athletes are the targets of relentless efforts of investment advisers who engage in fraudulent financial advice. According to a 2008 survey conducted by Sports Illustrated, 78% of former NFL players have gone bankrupt or are under financial stress by the time they have been retired for two years. The same survey found that 60% of former NBA players are broke within five years of retirement. Major league baseball players are also not immune from fraudsters, and dozens of players have filed lawsuits in the past several years seeking tens of millions of dollars in investment fraud losses.

Laurence Landsman, a partner in the Chicago law firm Block & Landsman, has published an article on the problem of athletes who face the devastating effects of financial fraud. The article, which was published by the National Sports Law Institute at the Marquette University Law School, discusses several examples of athletes being defrauded by trusted advisers, and explores how the scams successfully lure unsuspecting athletes.

Athletes are targeted for financial fraud because of their youth, inexperience in investment matters, and the large sums of money they earn. Last year, players on NFL rosters earned a collective $3.3 billion in salaries, with an average of $1.8 million in earnings per player.

Mr. Landsman's article explains how fraudsters use current or former players, who are often victims themselves, to lure their teammates into investment scams that promise large returns that are, in reality, impossible to be achieved. The article also looks into the ineffective effort by the National Football League Players' Association ("NFLPA") to create a program to deter financial fraud against players.