1.  Ask if the promoter, advisor, broker, or other financial professional is registered. Then, verify the registration status with the correct official, either your state’s securities regulator or the Financial Industry Regulatory Authority (FINRA). (For a list of state securities regulators, click here. To access FINRA’s BrokerCheck click here.)
    
2.  Be wary of anyone pitching “today’s hottest deal,” “the next big thing,” “the next Google or Apple,” or other such taglines, particularly if the pitch is unsolicited. The truth is, if the investment opportunity were really that great, you probably wouldn’t hear about it. The promoter would be pitching to institutional investors or sophisticated investors with deeper pockets than yours.
    
3.  Remember the age-old adage: “If it sounds too good to be true, it probably is.” In fact, in today’s market, you can scratch the “probably.” The potential for high returns always means higher risk. That’s how the market works. Anyone pitching a “guaranteed,” “risk-free,” or “low-risk” investment that supposedly offers higher-than-average returns is running a scam.
    
4.  Be wary of “great investment opportunities” pitched by someone affiliated with your church, community, ethnic, or professional affiliation groups. Con men (short for “confidence men”) use social currency (and a lot of charm!) to gain your trust just long enough to part you from your money. You may think you can spot a thief or con man, but they’re notoriously difficult to catch, which is why affinity fraud is so rampant. (For examples, see … and …)
    
5.  Make sure you can access your account through a third-party or custodian. (A custodian is a financial institution that is responsible for safeguarding an individual or institutional investor's financial assets, i.e. stocks, bonds, mutual funds, and currency.) This ensures you will be able to verify your account information and activity statements outside of the information provided to you by your broker or advisor, which cuts down on their ability to falsify your documentation.
    
6.  Never write a check directly payable to an individual broker, advisor, promoter, or other financial professional. Make sure you only make checks payable to the firm where your assets are actually being held.
    
7.  Make sure you understand the liquidity restrictions on your account. Ask for details on when and how you can access your money.
    
8.  Be particularly wary about any “investment opportunity” pitched via an unsolicited telephone call, email message, social networking website, or sales seminar. Many unsolicited “opportunities” are nothing but scams.
    
9.  Ask for details on how the promoter, advisor, broker, or representative gets paid. Is it by commission, amount of assets managed, or some other method? This will help you uncover any conflicts of interest.
    
10.  Don’t fall victim to “high-pressure” tactics that try to convince you to “act now.” Take the time to do your research. Investigate the representative’s background, and feel free to show the details of the investment opportunity to your accountant, lawyer, or other financial professional. Con artists will do everything they can to make you feel you have to make a decision right away so you don’t have time to investigate their claims. Don’t fall for it.
    
     

A receiver, James Swaim, has been appointed to recover Wayne T. Essex’s business assets for the purposes of distribution, according to a Jan. 30 Ohio Department of Commerce Information Release.

The action is a step forward in the securities fraud case brought against Essex and his companies – Essex and Associates, Inc., Essex HR & Associates, Inc., and HR Reconciliation, LLC –in Dec. 2011. A temporary restraining order issued by Montgomery County Common Pleas Court Judge Mary Wiseman in Dec. barred them from selling or offering securities, as well as destroying evidence of their allegedly fraudulent activities.

The order was issued in response to a Complaint filed last year by the Ohio Division of Securities. The Complaint accused Essex of committing securities fraud, selling securities without a license, and selling $1.1 million worth of unregistered securities to twenty investors from July 6, 2010 to Nov. 23, 2011. (For more information about the case, please see our  Jan. 2 blog post.)

About Our Law Firm:

The law firm of Meyer Wilson is the only Ohio law firm that is exclusively dedicated to individual investor claims and class actions. We have successfully represented investors all throughout Ohio in securities arbitration, mediation, and litigation claims against the stockbrokers, brokerage firms and financial advisors. All of our cases are handled on a contingency fee and we do not request retainers of any kind.

To schedule a free consultation with an experienced Ohio investment fraud attorney, please call us today at 614-224-6000 or toll-free at 1-866-827-6537. We also invite you to read our FREE book for more information about your rights and potential recovery: Five Signs of Investment Fraud... And What to Do if it's Happened to You.

The three Ohio pension funds – Ohio Public Employees Retirement System, State Teachers Retirement System of Ohio, and Ohio Police and Fire Pension Fund – led the securities class action lawsuit, which accused AIG of accounting fraud, collusion, and stock price manipulation. The pension funds claimed they lost a combined total of $95.8 million after AIG admitted to an accounting fraud in 2005. The case’s final settlement was approved in the Southern District of New York.

"Ohioans and Ohio retirees' retirement accounts took a hit when AIG was accused of widespread misconduct. I'm glad these hard-working citizens, including Ohio's first responders and teachers, will finally get some financial recovery," said Ohio Attorney General DeWine.　

It is still unclear exactly how much any one investor will receive, but the total settlement is one of the largest securities class action settlements in U.S. history. If there is no appeal, eligible shareholders may begin to see results of the settlement after about six months, according to the Ohio Attorney General’s office.

About Our Law Firm:　

The law firm of Meyer Wilson is the only Ohio law firm that is exclusively dedicated to individual investor claims and class actions. We have successfully represented investors all throughout Ohio in securities arbitration, mediation, and litigation claims against the stockbrokers, brokerage firms and financial advisors. All of our cases are handled on a contingency fee and we do not request retainers of any kind.

To schedule a free consultation with an experienced Ohio investment fraud attorney, please call us today at 614-224-6000 or toll-free at 1-866-827-6537. We also invite you to read our FREE book for more information about your rights and potential recovery: Five Signs of Investment Fraud... And What to Do if it's Happened to You.

• Increased authority for the Securities and Exchange Commission (SEC) to impose consequences on firms that repeatedly violate antifraud laws
• The Attorney General’s establishment of a special financial crimes unit charged with prosecuting big financial fraud cases

Need a Columbus securities fraud attorney?

A Cease and Desist Order finally was filed against Kevin Paul O’Brien and his companies, O’Brien Private Wealth Management and O’Brien PWM, LLC, in November. Last summer, the Ohio Division of Securities notified O’Brien of its intent to file a Cease and Desist Order related to O’Brien’s alleged unlicensed sale of securities. (For more information about O’Brien’s alleged activities, read our June 28 blog post here.) In August, O’Brien challenged the state’s allegations that he illegally acted as an investment adviser and committed securities fraud. This November, O’Brien finally consented to the Division’s findings, which included the assertion that neither O’Brien nor O’Brien PWM, LLC was licensed to act as an investment adviser, representative, dealer, or salesperson for compensation in the State of Ohio. In the Consent Agreement, O’Brien also agreed to refund the investment adviser fees received from two Ohio investors, and to extend an Offer of Rescission of investment adviser fees paid by all clients from Sept. 2008 to present.

The Ohio Division of Securities also participated in a collaborative investigation into Goldman Sachs’ marketing and sale of auction rate securities. The investigation found that Goldman Sachs, through its sales force, made misrepresentations to investors about the liquidity and safety of auction rate securities. These misrepresentations led to significant losses for investors in Feb. of 2008 when the auction rate securities market collapsed. For the misrepresentations and its failure to supervise the firm’s salespeople, Goldman Sachs was ordered to pay a penalty of $410,062.50. The Division also ordered the firm to repurchase illiquid auction rate securities from eligible investors. As part of the Consent Agreement, Goldman Sachs consented to the entry of the Division’s findings and waived its right to a hearing or appeal.

A second Administrative Consent Order connected to the auction rate securities market also was filed in November, this time in the matter of Wells Fargo Investments, LLC. According to the Order, Wells Fargo Investments failed to supervise some of its sales agents whom marketed auction rate securities to unsuitable investors. The Ohio Division of Securities attributed the marketing errors to the sales agents’ lack of education on the specifics of the auction rate securities market. According to the Division, Wells Fargo Investments should have provided its agents with adequate education; it also should have established specific written supervisory procedures to monitor the auction rate securities transactions. For its failure to supervise, Wells Fargo Investments was ordered to pay a penalty of $3,915.55. The firm also agreed to repurchase certain illiquid auction rate securities from eligible investors. As part of the Consent Agreement, Wells Fargo Investments consented to the entry of the Division’s findings and waived its right to a hearing or appeal.

The Ohio Division of Securities also issued a Notice of Opportunity for Hearing in the matter of Du Pasquier & Co., Inc. In the Notice, the Division informed Du Pasquier & Co. that a Cease and Desist Order alleging unlicensed sales of securities would be issued against the company in the next thirty days unless the company requested a hearing. (A Cease and Desist Order was issued on the Dec. 7. A Consent Agreement was entered the same day.)

Additional information about these cases is available on the Division’s website.

About Our Law Firm:

The law firm of Meyer Wilson is the only Ohio law firm that is exclusively dedicated to individual investor claims and class actions. We have successfully represented investors all throughout Ohio in securities arbitration, mediation, and litigation claims against the stockbrokers, brokerage firms and financial advisors. All of our cases are handled on a contingency fee and we do not request retainers of any kind.

To schedule a free consultation with an experienced Ohio investment fraud attorney, please call us today at 614-224-6000 or toll-free at 1-866-827-6537. We also invite you to read our FREE book for more information about your rights and potential recovery: Five Signs of Investment Fraud... And What to Do if it's Happened to You.

Now, a receiver in charge of finding and cataloging Cook’s assets has filed a Minnesota lawsuit against Ohio-based broker-dealer NRP Financial. The lawsuit accuses NRP Financial of ignoring and assisting the proliferation of Cook’s scheme by failing to supervise former registered representative Jason Beckman.

The SEC brought charges against Beckman in March of 2011. In its Complaint, the Commission alleged that Beckman raised $47.3 million from 143 investors in a fraudulent, unregistered investment offering. According to the recent lawsuit filed by Cook’s receiver, that $47.3 million made Beckman a major contributor to Cook’s scheme.

The lawsuit alleges that Beckman worked with NRP Financial from November 2005 through February 2008 as owner and operator of the now-defunct Oxford Private Client Group (PCG). NRP Financial is located in Bryan, Ohio. PCG functioned as NRP's branch office in Minneapolis.

The lawsuit further alleges that NRP Financial had plenty of opportunities to uncover Beckman’s alleged participation in the fraud, and that the firm went so far as to create a "flimsy and obviously whitewashed paper trail to conjure the illusion of supervision and oversight where none actually existed." (Quoted from a Star Tribune article. For more information, read the full article here.) The lawsuit seeks monetary damages from NRP Financial.

About Our Law Firm:　

The law firm of Meyer Wilson is the only Ohio law firm that is exclusively dedicated to individual investor claims and class actions. We have successfully represented investors all throughout Ohio in securities arbitration, mediation, and litigation claims against the stockbrokers, brokerage firms and financial advisors. All of our cases are handled on a contingency fee and we do not request retainers of any kind.　

To schedule a free consultation with an experienced Ohio investment fraud attorney, please call us today at 614-224-6000 or toll-free at 1-866-827-6537. We also invite you to read our FREE book for more information about your rights and potential recovery: Five Signs of Investment Fraud... And What to Do if it's Happened to You.

In 2009, Mr. Hankins was released to home confinement. Now, the government is accusing Mr. Hankins of starting another investment scam within days of being released to his home. This time, Mr. Hankins was accused of soliciting for investments in a fictional company that he called Bankers Trust & Annuity. The government alleges that Mr. Hankins incorrectly claimed that the company had $120 million in asset investments and average returns of more than 35%.

In November 2011, Mr. Hankins was sentenced to 40 months in prison for his second alleged scam. This sentence came before the 2008 sentence was fully served.

About our law firm: 

The only Ohio law firm that is exclusively dedicated to individual investor claims and class action lawsuits is the Law Firm of Meyer Wilson. Our experienced Cleveland investment fraud lawyers have successfully represented investors throughout Ohio in securities arbitration, mediation, and litigation claims against stockbrokers, brokerage firms, and financial advisors. 

All of our cases are handled on a contingency fee, and we do not request retainers of any kind. To schedule a free consultation with an experienced Cleveland investment fraud attorney, please call us today at 614-224-6000 or toll-free at 1-866-827-6537. 

If you have been the victim of an Ohio investment scam or have questions about your rights and potential recovery if you should become the victim of a scam, please read our FREE book Five Signs of Investment Fraud... And What to Do if it's Happened to You.

Investors can assess how their investment strategy fits in with their current financial situations and their future goals by considering the following questions:

• Why am I saving and investing?
• What are my short-term and long-term financial goals?
• What level of risk am I comfortable with?
• Does my current portfolio match my comfortable level of risk? Will it get me to my goals? If not, which savings or investment products would?

Investors may find that their current portfolios or strategies don’t fit their needs. If that’s the case, investors should make sure they thoroughly investigate any savings or investing opportunity they consider. They also should be on the lookout for investment schemes that promise unrealistic returns.

"No matter how tempting it might be, Ohioans should resist pursuing risky investing bets to overcome any losses they may have suffered during the financial crisis," said David Goodman, Director of the Ohio Department of Commerce in a Dept. press release.　 "It is important to be aware of con artists who prey on peoples’ fears with false promises of ‘guaranteed’ returns at no risk."

In particular, the Ohio Department of Commerce warns Ohioans to be on guard against the top five types of investment fraud: Ponzi schemes; unlicensed and unregistered sales; affinity fraud; promissory note schemes; and distressed real estate schemes. All of which were prevalent in 2011, and many of which lured investors with false promises of high returns with little risk.

Director Goodman encourages Ohio investors to protect themselves from investment fraud by:

• Verifying that the person promoting the investing opportunity is licensed, and that the product is registered with the Division of Securities;
• Conducting a background check on advisers to uncover any enforcement actions or complaints against them;
• Being leery when it comes to friends’ and family members’ recommendations of an opportunity or promoter;
• Being skeptical about any opportunity or promoter who promises unusually high or "guaranteed" returns;
• Asking for and read the prospectus or offering documents in full; and
• Making sure they thoroughly understand the opportunity before they invest.

For more about how to choose a trustworthy adviser or how to avoid investment fraud in 2012, browse our investor library here.

About Our Law Firm:

The law firm of Meyer Wilson is the only Ohio law firm that is exclusively dedicated to individual investor claims and class actions. We have successfully represented investors all throughout Ohio in securities arbitration, mediation, and litigation claims against the stockbrokers, brokerage firms and financial advisors. All of our cases are handled on a contingency fee and we do not request retainers of any kind.

To schedule a free consultation with an experienced Ohio investment fraud attorney, please call us today at 614-224-6000 or toll-free at 1-866-827-6537. We also invite you to read our FREE book for more information about your rights and potential recovery: Five Signs of Investment Fraud... And What to Do if it's Happened to You.

The State’s Complaint alleged that Essex sold $1.1 million worth of fraudulent promissory notes in the Dayton Small Business Capital Fund to 20 investors from July 6, 2010 to November 23, 2011. Essex is accused of telling investors the promissory notes would be used to make loans to and investments in Dayton-area small businesses. The Complaint alleged that none of the money was used for the stated purpose.

Instead, the Complaint alleged, Essex commingled investor funds with his business accounts and used the money for his personal purposes. The Complaint further alleged that Essex was selling securities that were not properly registered, and that he was doing so even though he was not licensed to sell securities in Ohio. Essex is accused of failing to disclose these alleged facts to investors.

The Complaint further alleged that Essex falsely represented the securities to investors. In particular, Essex allegedly told investors their "guaranteed" investments would yield annual returns of five, seven, or 10 percent, dependent on how much was invested. Essex allegedly told investors that larger investments would yield the highest returns.

The TRO issued on Friday bars Essex and his businesses from selling or offering to sell securities, and from destroying or altering any records, among other things. A preliminary injunction has been scheduled for mid-January, according to a Dec. 23 Ohio Department of Commerce news release.

About Our Law Firm:

The law firm of Meyer Wilson is the only Ohio law firm that is exclusively dedicated to individual investor claims and class actions. We have successfully represented investors all throughout Ohio in securities arbitration, mediation, and litigation claims against the stockbrokers, brokerage firms and financial advisors. All of our cases are handled on a contingency fee and we do not request retainers of any kind.

To schedule a free consultation with an experienced Ohio investment fraud attorney, please call us today at 614-224-6000 or toll-free at 1-866-827-6537. We also invite you to read our FREE book for more information about your rights and potential recovery: Five Signs of Investment Fraud... And What to Do if it's Happened to You.

The Ohio Department of Commerce Division of Securities released recently a summary of the Orders issued by the Division last month. The Division issued three Cease and Desist Orders and one Consent Agreement in a total of three cases.

The Division ordered John P. Tonelli, Jr., of Batavia, Ohio, to cease and desist from engaging in any securities-related activities after an allegedly fraudulent transaction came to the Division’s attention. According to the Order, Tonelli allegedly represented himself to his cousin’s husband (Mr. Ricks) as operating under the name Rapid Cash Flow Solutions, and solicited an investment from Mr. Ricks in ASM Financial Funding’s Wealth Enhancement Club (WEC). WEC was purported to be a joint venture program of ASM Financial Funding Corporation (ASM), and one which ASM managed.

Tonelli allegedly represented the WEC investment as a short-term, low-risk opportunity that would render a profit of 10 percent. He also allegedly assured Mr. Ricks that his principal would be protected. Mr. Ricks believed Tonelli’s claims and invested a total of $200,000 in WEC. (The funds were from an insurance settlement the husband and wife received for damage done by Hurricane Katrina to their Louisiana home.) Tonelli later solicited an additional $30,000 from Mr. Ricks for another investment. At no time was Tonelli registered to sell securities in Ohio. The securities sold by Tonelli to Mr. Ricks were also unregistered. Mr. Ricks has yet to receive back any of the $230,000 he invested with Tonelli.

Ohio Kentucky Oil Corporation, an oil and gas business with offices located in North Canton, Ohio, was also named in a Division Cease and Desist Order. According to the Order, Ohio Kentucky paid a $2,826.50 commission or "bonus" to an employee as a result of a 2006 Ohio securities transaction in which one Ohio investor purchased $43,515.00 worth of shares in an Ohio Kentucky Joint Venture investment product. The employee was not a licensed Ohio securities dealer at the time of the sale. Further, the Division states that the product’s Form D filing stated that, "no commissions were being paid to anyone involved in the sale of the offering." The Division found that the employee’s "bonus" violated state securities regulations.

The third Cease and Desist Order issued by the Division last month was against Universal Property Development Corp. (formerly known as ProCore Group, Inc.), a California corporation located in University Heights, Ohio. In the Order, the Division accused Universal Property of soliciting an investment in and selling $100,000 worth of unregistered securities in ProCore Group, Inc. in 2005.

Additional information about these cases are available on the Ohio Division of Securities website.

About Our Law Firm:

The law firm of Meyer Wilson is the only Ohio law firm that is exclusively dedicated to individual investor claims and class actions. We have successfully represented investors all throughout Ohio in securities arbitration, mediation, and litigation claims against the stockbrokers, brokerage firms and financial advisors. All of our cases are handled on a contingency fee and we do not request retainers of any kind.

To schedule a free consultation with an experienced Ohio investment fraud attorney, please call us today at 614-224-6000 or toll-free at 1-866-827-6537. We also invite you to read our FREE book for more information about your rights and potential recovery: Five Signs of Investment Fraud... And What to Do if it's Happened to You.

A recent Indiana investment fraud case highlights exactly how self-directed IRAs can be used to perpetrate fraud.

Randall Morrison, a former businessman in Fort Wayne, Indiana, used self-directed IRAs to defraud fifteen investors out of their retirement savings. According to state officials, Morrison used his religious affiliation to gain investors’ trust, and then convinced them to roll their traditional IRAs and life insurance proceeds into Ohio-based Equity Trust Co., a self-directed IRA custodial company. He then gained access to the investors’ funds and used it for personal expenditures.

"Randall Morrison preyed on those who considered him a friend," said Indiana Secretary of State Charlie White. "He didn’t just gamble with their life savings, he squandered their life savings."

Morrison was not a registered broker-dealer. According to the Indiana Securities Division, he never even applied to be one. But, the use of a self-directed IRA enabled him to present a legitimate front.

"What investors need to understand is that the custodians and the trustees of self-directed IRAs have very limited duties," Christopher Naylor, the head of the Securities Division for the Indiana Secretary of State’s Office, told The Journal Gazette. Those duties do not include the evaluation of the proposed investment product or the product’s promoter (in this case, Morrison). Additionally, it is the promoter (Morrison) who is responsible for reporting the investment’s worth to the custodian.

All together, investors lost approximately $1.4 million in Morrison’s scheme. For many of them, it was everything they had.

Morrison is currently serving a six-year prison sentence for his role in the securities scheme. He was charged with seven felony counts of securities fraud and one felony count of corrupt business influence in September 2010. He agreed to plead guilty to one count of corruption in exchange for a lighter sentence. (For more information about Morrison’s investment fraud scheme and Ohio-based Equity Trust’s role in it, read The Journal Gazette’s article here.)

About Our Law Firm:

The law firm of Meyer Wilson is the only Ohio law firm that is exclusively dedicated to individual investor claims and class actions. We have successfully represented investors all throughout Ohio in securities arbitration, mediation, and litigation claims against the stockbrokers, brokerage firms and financial advisors. All of our cases are handled on a contingency fee and we do not request retainers of any kind.

To schedule a free consultation with an experienced Ohio investment fraud attorney, please call us today at 614-224-6000 or toll-free at 1-866-827-6537. We also invite you to read our FREE book for more information about your rights and potential recovery: Five Signs of Investment Fraud... And What to Do if it's Happened to You.