History Of Investors Capital Corporation’s Malfeasance

Richard Frankowski

9 years ago

Investors Capital Corporation, a dually-registered independent Broker/Dealer and Investment Advisory firm, has a long history of malfeasance.

In the summer of 2014, Patricia S. Miller, a former financial adviser with ICC, was arrested for orchestrating a massive Ponzi scheme that cost her clients millions in savings. Through her scheme, she obtained $4.1 million from over 80 victims and was sentenced earlier this year to six years in prison. According to her indictment, “from in or about January 2002, through May 2014, [Ms.] Miller defrauded and obtained money and property from clients by means of materially false and fraudulent pretenses, representations and promises concerning purported investments that Miller never made on behalf of the clients.” This activity occurred while Miller was a registered representative of ICC.

Another former ICC adviser, Haran Brucker, who was registered with ICC from May 2004 to December 2012, has been involved in seven customer disputes since 2002. Though two complaints were denied, the other five were settled for amounts ranging from $24,500 to $129,500.

A third former ICC adviser, Edwin Mosquera, was barred by FINRA for violations of various rules of conduct, which included excessive trading in three customers’ accounts and improperly exercising discretion in a trading account. Another ICC adviser, Christopher Solomon, was also barred by FINRA for misappropriating customer funds and violating other FINRA and SEC rules. Both ICC brokers are permanently banned from ever associating with another FINRA broker dealer as a result of these complaints and misconduct.

Broker Jeffrey M. Isaacs of ICC was suspended and sanctioned by FINRA in 2013 after allegedly making negligent material misrepresentations of fact in connection with the unsuitable sale of two private placements to ICC customers. After the customers complained to him, he settled their claims without notifying ICC.

In June 2011, ICC was censured and fined by FINRA for a number of regulatory complaints. According to FINRA, ICC failed to maintain a supervisory system regarding the sale of certain collateralized mortgage obligations. This system was necessary to protect the well-being of investors from the misconduct of brokers and to detect and rectify “red flags” that occur in customers’ accounts. Such systems are critical to preventing customer losses and broker misconduct. In connection with this complaint, Investors Capital Corp. consented to a fine of $200,000.

Also in 2011, ICC was ordered to pay approximately $400,000 in restitution to customers who purchased private placement interests in Provident Royalties. According to the 2011 complaint against ICC, the investment in Provident Royalties was highly risky and ultimately failed – costing investors their entire principal.

In 2014, FINRA found that ICC had failed to provide prospectuses to customers who purchased ETFs for nearly two years. ICC even allowed some of its investment representatives to start selling the ETFs before they had completed any company-mandated training about them. FINRA charged that ICC did not have an adequate supervisory system in place and it did not have a written supervisory procedure governing the sale of ETFs or the requirement to deliver prospectuses to customers. And the scale of the breach was significant: ICC sold approximately 64,400 ETFs to 7,300 customers during the period in question.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.