Dennis D. Bailey of Bel Aire, Kansas has been sentenced to five years in prison for securities fraud. In addition to his 61 month prison sentence, Bailey was ordered to pay $875,000 in restitution. The former financial adviser had previously pleaded guilty to one count of felony securities fraud under the Kansas Uniform Securities Act. Bailey had been originally charged with 39 felony counts of securities fraud and selling unregistered securities but only pleaded guilty to the one count.
Seven Kansas investors were bilked out of over $700,000 from January 2008 to February 2011 when Bailey sold them unregistered securities in an an entity called Legacy Capital. Prosecutors believe that Bailey used a large portion of the money he received from his investors for personal expenses. Bailey had previously been suspended in 2010 by FINRA from associating with any FINRA member in any capacity for two years. Without admitting or denying the allegations, Bailey consented to the described sanctions and to the entry of findings that he made unsuitable recommendations to customers to open accounts with his member firm to buy and sell CMO securities. FINRA found Baily did not have reasonable grounds to believe that his recommendations were suitable for his customers in light of their investment goals, risk tolerance, and investment experience. FINRA also found that Bailey made material misrepresentations and omitted material facts, including representing that investing in CMOs would reap substantial returns with virtually no risk. Finally, the findings also included that Bailey exercised discretion in customers’ non-discretionary accounts without written authorization signed by any of his clients and a firm principal. 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.