Articles Posted in Disciplinary Actions

On August 25, 2015 the Securities and Exchange announced that James R. Glover, a former registered representative with Signator Investors, Inc. submitted an Offer of Settlement which the SEC accepted. Solely for the purpose of the SEC’s proceedings and without admitting or denying the findings herein, James R. Glover agreed to the findings that he engaged in a fraudulent offering scheme and investment advisory fraud.

The complaint alleged that from approximately January 1999 through May 2012, Glover raised over $13,000,000 from over 100 customers by soliciting them to invest in Colonial Tidewater. The complaint alleged that Glover solicited investments in Colonial Tidewater through materially false and misleading statements regarding the financial health of Colonial Tidewater, the expected returns and risk of investing, and his personal financial stake in the unregistered offerings.

The complaint further alleged that Glover misappropriated substantial sums from investors.

On  September 8, 2015 the SEC barred Marc Mandel of Boulder, CO who called himself  the “Wizard of Wall Street” from selling stocks, and ordered him to pay fines to the Commission.

Mandel, CEO of Wall Street Radio Inc. and host of the radio show “Winning on Wall Street” accepted the cease-and-desist order without admitting or denying the findings.

According to the SEC’s AWC, Mandel partnered with Ditto Holdings Inc. the owner of FINRA broker dealer Ditto Trade, in order to introduce his newsletter subscribers to Ditto Trades’ securities offerings.

On September 9, 2015 the Securities and Exchange announced administrative and cease and desist proceedings against Dawn J. Bennett a former registered representative with Western International Securities in Washington, D.C.

The SEC’s complaint alleges that from 2009 through February 2011, Bennett Group Financial and Bennett, made material misstatements and omissions regarding assets that were purportedly “managed” for investors and regarding investment returns for the purpose of retaining existing customers and attracting new customers. Then, during the investigation of this matter, Bennett and Bennett Group made additional misstatements in an effort to obstruct the investigation and to “cover up” their alleged prior fraud.

The SEC claims that Bennett and Bennett Group grossly overstated the amount of assets they managed in a calculated effort to inflate their profile and prestige. They made the false and fraudulent claims to a national financial advisor ranking service knowing that the ranking service would publish the misstatements. They also made the misstatements on a Washington, D.C.–area radio program hosted by Bennett, and in a variety of other advertisements and communications with existing and prospective customers and clients. The purpose of these overstatements was to create the impression that Bennett and Bennett Group were larger and more successful players in the industry than they were.

On January 6, 2016 the SEC charged Sheik Khan (aka Abida Khan,) a registered representative formerly with Ameritas Investment Corp. out of Murrieta, CA with violations of Section 10 of the Exchange Act and Rule 10(b)(5) and Section 206 of the Advisors Act.

The complaint against Sheik Khan arises from a claim the SEC brought against Edward Durante, who is accused of defrauding at least 50 unsophisticated investors of $11 million through the sale of securities of VGTel, Inc., a shell company he controlled.

According to the SEC’s complaint Edward Durante defrauded investors by selling approximately six million shares of VGTel stock to investors using a fictitious name to hide his criminal past and lying to investors regarding the use of stock sale proceeds.  Durante also bribed investment advisers, who advised their clients to purchase VGTel stock without disclosing to their clients that they had been bribed. Durante also engaged in matched trading of VGTel stock with a stockbroker to artificially control the stock’s market price.

On January 6, 2016 the SEC charged Larry Werbel, a registered representative formerly with Summit Brokerage Services of Chagrin Falls, OH with violations of Section 10 of the Exchange Act and Rule 10(b)(5) and Section 206 of the Advisors Act.

The complaint against Larry Werbel arises from a claim the SEC brought against Edward Durante, who is accused of defrauding at least 50 unsophisticated investors of $11 million through the sale of securities of VGTel, Inc., a shell company he controlled.

According to the SEC’s complaint Edward Durante defrauded investors by selling approximately six million shares of VGTel stock to investors using a fictitious name to hide his criminal past and lying to investors regarding the use of stock sale proceeds.  Durante also bribed investment advisers, who advised their clients to purchase VGTel stock without disclosing to their clients that they had been bribed. Durante also engaged in matched trading of VGTel stock with a stockbroker to artificially control the stock’s market price.

On September 30, 2015 the Securities and Exchange announced that Edward Borg submitted an Offer of Settlement. Solely for the purpose of the SEC’s proceedings and without admitting or denying the findings herein, Edward Borg consented to the findings that he periodically manipulated the market for Natural Alternatives International, Inc.’s (“NAII”) common stock between 2003 through 2011.

Edward Borg engaged in manipulative trading to support the price of NAII stock and to give the false appearance of investor interest. He directed trading in several of his customers’ accounts, personally invested heavily in NAII and had several of his customers invest heavily in NAII, often in high concentrations (more than 90% of the account’s total value) and frequently on margin.

In connection with one All Funds customer, Borg recommended that she invest in NAII almost exclusively, which was not suitable in light of her investment objectives. During this period, Borg personally owned as much as 22.5 percent of NAII’s outstanding stock, and customers at All Funds, combined with Borg’s personal holdings, owned as much as 55 percent of the outstanding shares of NAII.

On September 30, 2015 the Securities and Exchange announced that Securus Wealth Management LLC submitted an Offer of Settlement. Solely for the purpose of the SEC’s proceedings and without admitting or denying the findings herein, Securus Wealth Management and James Goodland consented to the findings that from January 2010 through July 2013, Securus and James Goodland, its President and Chief Compliance Officer, failed reasonably to supervise Howard Richards, an investment advisory representative associated with Securus Wealth Management. The findings also stated that Securus and Goodland failed to adopt and implement an adequate system of internal controls with a view toward preventing and detecting violations of the Advisers Act.

During this period, Richards engaged in a manipulative scheme to support the market price of Gatekeeper USA, Inc. (“Gatekeeper”) to help Gatekeeper obtain financing. Gatekeeper was a start-up company whose stock was thinly-traded on the over-the counter grey market under the symbol GTKP. Howard Richards caused his clients to invest over $1 million in shares of Gatekeeper stock during this period. This trading was unusual for Securus Wealth Management, whose primary business involved investing in mutual funds on behalf of its clients. In furtherance of his scheme, Howard Richards sent numerous emails from his Securus Wealth Management email account to an insider at Gatekeeper in which he discussed his scheme. In addition, Howard Richards failed to disclose significant conflicts of interest to his advisory clients arising from his personal ownership of Gatekeeper shares and his close involvement with the company

Howard Richards registration and disciplinary history

On January 27, 2015, the Securities and Exchange Commission obtained a final judgment against Edwin Fujinaga and MRI International, Inc. The judgment requires Fujinaga and MRI to pay more than $580 million.

The SEC alleged that MRI International and Edwin Fujinaga perpetrated an elaborate Ponzi scheme designed to misappropriate money from investors. The SEC claimed that the MRI International raised money from thousands of investors living primarily in Japan under the premise that MRI was using their funds to buy accounts receivable from medical providers at a discount, and turning those over to collect the full value of the receivables from insurance companies.

The SEC alleged that defendants used the money for other purposes, including financing Edwin Fujinaga’s extravagant lifestyle. In October 2014, the court granted the SEC’s motion for summary judgment on liability against Edwin Fujinaga and MRI International on all charges against them, including the following violations of the antifraud provisions of the federal securities laws: Sections 17(a)(1), (2), and (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

On April 7, 2015 the SEC charged Los Angeles-based Pacific West Capital Group, Inc. and its owner Andrew Calhoun with fraud in the sale of “life settlement” investments.

The SEC’s complaint alleges that since 2004, Pacific West and Calhoun raised nearly $100 million from life settlement investors. Since at least 2012, Pacific West and Calhoun are alleged to have defrauded investors by using proceeds from the sale of new life settlements to continue funding life settlement investments sold years earlier. The complaint alleges that Pacific West Capital Group and Calhoun did not disclose this practice to investors, and attempted to make the life settlement investments they were selling appear successful when in fact, Pacific West Capital Group had used up the primary reserves to pay premiums on those policies.

According to the complaint, Pacific West and Calhoun also made false and misleading statements about the risks of investing in life settlements, including the risk of investors having to make increased premium payments as the insured people covered by the contract lived longer than Pacific West and Calhoun anticipated. Pacific West and Calhoun also are alleged to have misled investors about annual returns.

On December 18, 2015 the SEC charged Edward Durante, a recidivist securities law violator for running a multi-year securities offering fraud that targeted investors in New England, Ohio and California.

The SEC alleges that between 2012 and 2014, Edward Durante defrauded at least 50 unsophisticated investors of $11 million through the sale of securities of VGTel, a shell company he controlled.

According to the SEC’s complaint Edward Durante defrauded investors by selling approximately six million shares of VGTel stock to investors using a fictitious name to hide his criminal past and lying to investors regarding the use of stock sale proceeds.  Durante also bribed investment advisers, who advised their clients to purchase VGTel stock without disclosing to their clients that they had been bribed. Durante also engaged in matched trading of VGTel stock with a stockbroker to artificially control the stock’s market price.