Cryptocurrency and coin scams loomed large in the first six months of the year, but there were plenty of old-fashioned schemes and rip-offs cooked up by advisors in a bid to convince investors to part with their money.
And part with their money they did as the unscrupulous fraudsters filched millions of dollars from victims who were promised returns that were – as usual – too good to be true.
- A scheme in which defendants raised more than $102 million from 637 investors, ostensibly to buy books of business from retiring investment professionals. This fraud began in July 2011, investigators said.
Perry Santillo and Christopher Parris of Rochester, N.Y., Paul Anthony LaRocco, of Ocala, Fla, John Piccarreto, of San Antonio, and Thomas Brenner, of Orville, Ohio, persuaded victims to withdraw savings and invest in securities issued by three companies controlled by Santillo, Parris or their associates, authorities alleged.
The men, who used the funds to pay for lavish lifestyles, were either barred or suspended by FINRA.
- Benjamin Alderson and Bradley Hamilton, both top executives at deVere USA, a commission-registered investment advisor in New York, agreed to an $8 million civil penalty after they failed to disclose conflicts of interest to retail clients.
Between June 2013 and March 2017, the executives, both investor advisor representatives, misled clients about the benefits of transferring pension wealth from the United Kingdom to offshore accounts and from which the executives received lucrative commissions and fees, authorities alleged.
- Former broker Steven Pagartanis was charged with defrauding at least nine retail investors of $8 million by selling them securities using false and misleading statements from 2013 to February 2018, authorities said.
Instead of investing the money, he deposited the cash into his bank accounts and made payments to other investors – a Ponzi scheme in which brokers raise money from one investor only to pay off another.
Victims included retirees who had been his customers for many years and sent them statements that were false.
Pagartanis has been barred from the securities industry, according to FINRA records.
- Two Texas companies and their principals were charged in a $2.4 million scheme and a related $1.4 million offering fraud targeting retirees, authorities alleged.
From 2010 to 2017, Clifton E. Stanley allegedly lured at least 30 elderly victims to invest $2.4 million in exchange for investments returns in Lifepay Group, a retirement planning and real estate investment business that he controlled.
Investors were lured with the promise of outsized returns, authorities said.
In 2015, Stanley and associate Michael E. Watts are alleged to have convinced still more elderly victims to invest $1.4 million in another company, SMDRE.
Funds flowing to SMDRE were used to keep Lifepay afloat and to pay for personal expenses like club memberships and travel, authorities said.
- Kirbyjon Caldwell, a senior pastor at Windsor Village United Methodist Church in Houston, one of the largest Protestant churches in the country, and Gregory Alan Smith, a self-described financial planner barred from the securities industry, targeted elderly investors by selling them defunct Chinese bonds of no value, authorities allege.
Between 2013 and 2014, Caldwell and Smith raised $3.4 million from 29 investors, some of whom liquidated their annuities to invest in the scheme, authorities said.
Money was used to make mortgage payments and buy luxury cars, with the remainder of the funds disappearing into offshore accounts.
In a separate complaint, the SEC charged attorney Shae Yatta Harper of Monmouth Junction, N.J., with helping Caldwell and Smith.
Harper has agreed to a $60,000 civil penalty and refrain from appearing or practicing as an attorney before the SEC for five years, authorities said.
Caldwell and Smith face up to 20 years in prison on wire fraud charges, and 10 years on money laundering counts, according to news reports. They maintain the bonds were legitimate.
- Between July 2012 and May 2015, Texas-based investment advisor Robert Mark Magee, sole proprietor of Valor Capital Asset Management, allocated profitable trades to his accounts and unprofitable trades to the accounts of his clients, authorities said.
The scheme, known as cherry-picking, netted big profits for the Austin, Texas-based investment advisor at the expense of his clients, authorities said.
Magee has agreed to a ban from the securities industry and to pay more than $715,000 to resolve charges against him.
- Steven J. Muehler has been charged with operating an unregistered broker-dealer and defrauding small businesses with the promise to help them raise money for investors, authorities said.
Three companies under the control of Muehler, his wife and an associate, are not registered as broker-dealers even as the companies have provided broker-dealer services to more than 20 small businesses, authorities said.
Muehler, owner of AltaVista Capital Markets, AltaVista Private Client and AltaVista Securities, is a serial recidivist who creates new companies after previous companies are shut down, authorities said.
He was barred from contact with real broker-dealers in 2016.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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