The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
March 19, 2019
North Suburban Man Sentenced to 5 Years in Federal Prison for Operating Ponzi Scheme That Swindled Elderly Investors (DOJ Release)
https://www.justice.gov/usao-ndil/pr/north-suburban-man-sentenced-5-years-federal-prison-operating-ponzi-scheme-swindled
After pleading guilty to one count of mail fraud in the United States District Court for the Northern District of Illinois, the founder of Principal Financial Strategies LLC and Safe Financial Strategies, Inc., Richard K. Booy, was sentenced to 60 months in federal prison. From 2012 to 2016, Booy victimized at least 15 clients in a $1.4 million scam whereby he had claimed to be affiliated with Principal Financial Group, althought he had no actual relationship with the firm and was not authorized to invest client funds with it. Instead of investing his victims' funds, Booy used their money to cover personal expenses, including health insurance, fitness club membership, and purchases at Best Buy and DirecTV, and to make Ponzi-type payments to earlier investors.Even after Principal Financial Group obtained a temporary restraining order against him that resulted in the court-authorized seizure of his computer and other evidence from his home, Booy persisted in his fraud. As set forth in part in the DOJ Release:
Most of Booy's victims were elderly, and some furnished him with their entire life savings. The victims included a Chicago pastor, a retired painter, a retired government worker, and an individual who suffers from Parkinson's Disease.
SEC Prays for Relief in Complaint Against the Church for the Healthy Self (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/4494/sec-whitney-parrish/
We are gathered here today to consider the life of the impressively named "Kent R.E. Whitney," who is a 37-year-old resident of Orange County, California. Whitney is a director and self-professed pastor of the equally impressively named Church for the Healthy Self a/k/a CHS Trust, which was incorporated in Texas in 2014 as a non-profit. We're going to refer to both the Church and the Trust as "CHS." As to that non-profit stuff, CHS allegedly gets "donations" via its CHS Trust investment program. Let's add into the mix, David Lee Parrish, 47, of Orange County, California, who also holds himself out as a pastor of CHS and a director of the CHS Trust. By the way, Whitney is also the founder and Chief Executive Officer of the CHS Asset Management Inc. for-profit corporation ("CAM"). CHS and CAM have no securities registered with the Securities and Exchange Commission and, go figure, both entities share the same principal place of business and primary address.
https://www.justice.gov/usao-wdnc/pr/new-york-man-pleads-guilty-securities-fraud-defrauding-retired-victims-more-400000
Rudolph Carryl pled guilty in the United States District Court for the Western District of North Carolinato securities fraud for defrauding retired victims of more than $400,000. Previously, Carryl was arrested at a halfway house in Brooklyn, N.Y., where he was serving time for federal wire fraud charges related to a separate investment scheme. As set forth in part in the DOJ Release:
[C]arryl held himself out as an investment advisor to his victims and operated Carryl Capital Management (CCM), an investment management firm with offices in New York City. CCM maintained a website that purported the firm adhered to rigorous risk control measures, and was dedicated to achieving the investment goals for its clients.In or about February 2015, Carryl induced a victim identified as "M.G." to hand over money which he promised to invest in stocks. Over the course of two years, M.G., who was Carryl's childhood friend and a retired nurse living in North Carolina, wired more than $75,000 to an account controlled by Carryl, based on Carryl's misrepresentations that M.G.'s money would be used to purchase stocks on M.G.'s behalf. Similarly, in or about May 2015, Carryl solicited victims "W.B.," a retired United States Air Force veteran, and his wife "A.B.," both of North Carolina, to invest approximately $350,000 in a purported investment fund that was managed by Carryl. To induce the retired couple to part with their money, Carryl claimed that he was a successful investment adviser who managed investments for the country of Saudi Arabia and that he was friends with wealthy celebrities.As Carryl admitted in court, rather than invest the victims' funds as promised, Carryl used the money to pay for personal and other expenses, and to make substantial cash withdrawals.Unbeknownst to his victims, Carryl had been convicted of federal wire fraud charges related to a separate investment scheme, and was sentenced in New York on or about August 9, 2017, to 12 months and one day in prison. After his sentencing but before he reported to the Federal Bureau of Prisons to begin serving his sentence, Carryl continued to be in contact with W.B., assuring W.B. that his investments were doing ok, all the while failing to disclose any information about his conviction or his impending report date to the Federal Bureau of Prisons.
https://www.justice.gov/usao-ct/pr/greenwich-man-pleads-guilty-federal-charges-related-investment-fraud-scheme
Leonid "Lenny" Pollak pled guilty in the United States District Court for the District of Connecticut to Pollak one count of wire fraud and one count of illegal monetary transaction. As set forth in part in the DOJ Release:
[P]ollak owned a Norwalk-based company that organized trade shows and expositions throughout the U.S. In mid-2013, Pollak induced an acquaintance to invest money in a new business venture that was supposed to organize similar expositions in the Ukraine. Instead of using the money to build the new business, Pollak spent as much as $250,000 on unrelated business and personal expenses, including his home mortgage loan, groceries and clothing, automobiles, and private school tuition.
Broker Imposter Scams: Remember To Ask And Check (FINRA Investor Alert)
http://www.finra.org/investors/alerts/broker-imposter-scams-ask-and-check
Following up on recent Investor Alerts about fraudsters impersonating FINRA executives offering bogus investment "guarantees" to investors as part of an advance-fee scam, FINRA warns the investing public of yet anothyer scam. As set out in part in the
FINRA Investor Alert:
FINRA Investor Alert:
We are aware of a recent scheme that involved an unregistered individual impersonating a registered investment professional to lure in potential investors. This scammer created a fake version of a public FINRA BrokerCheck report of a legitimate broker -- picking an experienced broker with a spotless regulatory record.The doctored BrokerCheck report was emailed to potential "clients" using the name and CRD number of a registered investment professional, and a company that is not registered as a broker-dealer with FINRA. The solicitation included other documentation and a request for investors to respond with a photo of their driver's license and other personal information. . .
Former UBS Employee Wins Damages and Expungement in FINRA Arbitration Employment Dispute
In the Matter of the Arbitration Between Jamarr Delauney, Claimant, v. UBS Securities LLC, Respondent (FINRA Arbitration Decision 16-03361 / March 15, 2019)
http://www.finra.org/sites/default/files/aao_documents/16-03361.pdf
In a FINRA Arbitration Statement of Claim filed in November 2016, associated person Claimant Delauney asserted defamation, breach of contract,
quantum meruit, unjust enrichment, wrongful termination, violation of NY Labor Law,
and failure to pay severance. At the hearing, Claimant requested at least $780,000 in the form of a 2015 bonus plus interest; $813,257.87 in deferred compensation plus interest; $813,257.87 in liquidated damages for deferred compensation; $780,000 in liquidated damages for unpaid 2015 bonus; and $3,240,000 in related damages. Additionally, Claimant sought the expungement of Respondent's alleged defamatory statements from his industry record. Respondent UBS generally denied the allegations and asserted various affirmative defenses. The FINRA Arbitration Panel found Respondent UBS liable and ordered the firm to pay to Claiant Delauney $90,000 in compensatory damages plus interest, and to reimburse him $375 for his FINRA filing fee. The Panel recommended that the "Termination Explanation" on Claimant's Form U5 be changed to "management lost confidence in employee," and ordered further conforming changes to the Form U5 and on Claimant's Central Registration Depository record.
Scottrade Customer Alleges He Was Encouraged to Inflate New Account Form Financials
In the Matter of the Arbitration Between Brad Ormsby, Claimant, v. Scottrade Inc., Respondent (FINRA Arbitration Decision 17-01265 / March 15, 2019)
http://www.finra.org/sites/default/files/aao_documents/17-01265.pdf
In a FINRA Arbitration Statement of Claim filed in May 2017, public customer Claimant Ormsby asserted violation of federal securities laws and rules; violations of the California Corporate Securittes Law of 1968; violation of the California Consumer Legal Remedies Act; constructive fraud under California Civil code Section 1573; and actual fraud. The FINRA Arbitration Decision asserts that the "uses of action relate to Respondent allegedly encouraging Claimant to inflate figures on new account forms and place all of his money into one cybersecurity stock." Claimant sought $163,000 in compensatory damages plus interest, costs, and fees. Respondent Scottrade Inc. generally denied the allegations and asserted various affirmative defenses. The FINRA Arbitration Panel denied Claimants claims.
http://www.finra.org/sites/default/files/aao_documents/17-01265.pdf
In a FINRA Arbitration Statement of Claim filed in May 2017, public customer Claimant Ormsby asserted violation of federal securities laws and rules; violations of the California Corporate Securittes Law of 1968; violation of the California Consumer Legal Remedies Act; constructive fraud under California Civil code Section 1573; and actual fraud. The FINRA Arbitration Decision asserts that the "uses of action relate to Respondent allegedly encouraging Claimant to inflate figures on new account forms and place all of his money into one cybersecurity stock." Claimant sought $163,000 in compensatory damages plus interest, costs, and fees. Respondent Scottrade Inc. generally denied the allegations and asserted various affirmative defenses. The FINRA Arbitration Panel denied Claimants claims.