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Texas REIT Offices Raided By FBI

The FBI raided the office of a Texas REIT, United Development Funding IV, this week. The firm saw its stock price drop 81% in the past two months after a hedge fund alleged it was operating for years like a Ponzi scheme. “The FBI is lawfully present and conducting law enforcement activity” at the UDF offices, said FBI spokeswoman Allison Mahan. The FBI's presence at UDF headquarters further diminished the company's share price, which fell almost 55% during trading on Thursday to $3.20 per share after it was reported locally that the FBI agents were carrying boxes out of the company's headquarters. In December, UDF shares were trading at $17.20. UDF IV had total assets of $684 million, the vast majority of which, $513.2 million, were notes receivable, according to its quarterly report from November. Notes receivable for related parties was $69.6 million, according to the report. UDF IV was knocked on its heels in December when an investor website [...]

By |February 19th, 2016|Fraud, Press Releases & News, SEC|
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Questar Advisor Allegedly Sold Fraudulent Securities

The Frankowski Firm is investigating complaints regarding and the termination of former Questar Capital Corporation advisor Kevin Wanner. The complaints allege that The North Dakota Securities Department issued a cease and desist order claiming that Wanner sold time certificate of deposit securities purporting to represent an investment in an FDIC insured interest bearing account and further misrepresented to the investors that their funds would be deposited with the FDIC member financial institutions represented. Instead, the funds were deposited into accounts owned and controlled by Wanner for his own purpose. Subsequently, on December 31, 2015, the NDSD revoked Wanner’s securities license in the state. On January 11, 2016, FINRA permanently barred Wanner form the securities industry. Wanner was barred from engaging in the business of insurance and from withdrawing any moneys from any banking or financial accounts. The order alleges that two people were given fraudulent certificates of deposit which could not be authenticated by the banks listed on the documents. Warner's alleged [...]

By |February 17th, 2016|FINRA, Fraud, Press Releases & News|
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Craig Scott Capital Subject Of FINRA Complaint

FINRA recently filed an amended complaint against Craig Scott Capital, LLC and its co-founders, Craig Scott Taddonio and Brent Morgan Porges, alleging, among other things, excessive trading, churning, failure to supervise. Churning and Excessive Trading According to the complaint, Respondents churned and excessively traded Craig Scott Capital customer accounts. They encouraged their sales team to recommend active trading in customer accounts to maximize commissions to the detriment of their customers. FINRA claims that for nearly three years Craig Scott Capital fostered a culture of aggressive, excessive trading of customer accounts. By encouraging the firm's representatives to recommend hundreds of short-term trades in customer accounts, the firm earned over $5 million in commissions while customers lost over $9 million dollars in losses in accounts where the annualized turnover rates were as high as over 200 and the annualized cost-to-equity ratios were as high as 800%. Failure to Supervise FINRA also alleged that Respondents failed to establish and enforce a reasonable supervisory [...]

By |February 12th, 2016|FINRA, Press Releases & News|
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FINRA Bars Two Advisers Following Broker Fraud

FINRA has barred two Buffalo, New York advisers, Timothy S. Dembskyi and Walter F. Grenda, from the securities industry for broker fraud in relation to the sale of a hedge fund, the Prestige Wealth Management Fund, LP. Dembski and Grenda's misconduct occurred while they were employed with Mid Atlantic Capital Corporation. FINRA discovered that Dembski and Grenda made material misrepresentations and omissions to make investors think that the fund was a "growth" fund that would be centered around a computer algorithm that automatically included risk protections and stop-losses to limit losses in the fund. However, in actuality, the fund was a highly speculative investment, the fund's Chief Investment Officer had complete control over investments made, and it was not obligated to follow the computer algorithm. In its last month that it was traded, the fund lost more than eighty percent of its value. Brad Bennett, FINRA's Executive Vice President and Chief of Enforcement, said, "In 2015, FINRA barred nearly 500 [...]

By |February 11th, 2016|FINRA, Fraud, Press Releases & News|
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