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Carl David Wright of Iron Station, North Carolina was sentenced Tuesday to four years imprisonment for operating a Ponzi scheme that defrauded investors out of $1 million. He will remain out on bond until he is ordered to report to federal prison. After serving his sentence, Wright will spend three years on supervised release and pay $817,975 in restitution to his victims.

The former middle school teacher operated his scheme by convincing people to invest in Commodity Investment Group out of Cherryville, North Carolina, conning people out of over $1 million from August 2008 to March 2013. Wright is believed to have lied to investors, promising unrealistic returns of up to 20 or 30 percent in a short time period. He also misrepresented to investors that the company would invest their cash in hedge funds, commodities, and Quick Trip convenience stores.

Wright, however, failed to invest the cash he received. Instead, he used the money to run a Ponzi scheme, using money from new investors to pay back earlier investors as well as using much of the money on personal expenses. According to court documents, a number of investors paid Wright by meeting him in a parking lot and giving him cashier’s checks. Wright was never registered as a commodity trader and pleaded guilty in June 2012. When his scheme collapsed in 2013, Wright had less than $1,000.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit frankowskifirm.com.

John C. Boschert of Apopka, Florida pleaded guilty yesterday to fraud for his role in a Ponzi scheme operated out of Clermont, Florida under the name Assured Capital Consultants. Boschert agreed to pay $11.6 million to victims in restitution and is looking at a maximum sentence of twenty years imprisonment. Though his plea will likely result in a reduced sentence.

Boschert, Jennifer E. Hoffman of Clermont, and Bryan Zuzga of Michigan are alleged to have operated a fraudulent investment scheme with around 100 victims dating back to 2009. The group promised investors that their funds would be used as collateral to make investments, but according to authorities the money was never used for that purpose. Rather, earlier investors were paid from money invested by newer investors, the defining element of a Ponzi scheme. Hoffman and Zuzga are believed to have purchased homes with the funds they received. The two are currently awaiting trial, which will begin in December.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit frankowskifirm.com.

FINRA fined two Merrill Lynch units $6 million yesterday for alleged short-selling rule violations, which included letting thousands of orders through their systems that violated emergency bans on ‘naked’ short sales in 2008. According to FINRA, Merrill Lynch Professional Clearing Corp. and Merrill Lynch Pierce Fenner & Smith Inc. did not have sufficient supervisory policies and procedures implemented in order to adhere to the SEC’s emergency orders in July and September 2008 that prevented traders from selling short shares of certain companies they did not own or had not previously arranged to borrow. These orders additionally mandated that traders deliver shares by the settlement date, which is typically three days after the transaction.

The Merrill Lynch units, subsequently, let thousands of orders go through their systems in violation of the SEC’s orders, which were made to prevent abusive, naked short sales in the midst of the financial crisis. FINRA additionally stated that Merrill Lynch’s clearing unit failed to close out particular fail-to-deliver positions as necessary under Regulation SHO. Further, the unit did not have the policies and procedures implemented to address its closeout requirements or adhere to anti-money laundering rules.

Both units of Merrill Lynch have settled the claims without either admitting or denying wrongdoing. Merrill Lynch Professional Clearing paid $3.5 million. Merrill Lynch Pierce Fenner & Smith paid $2.5 million. In reference to the settlement, a Merrill Lynch spokesperson stated, “We are pleased to resolve this matter. We take very seriously our obligations and have improved our procedures to address issues identified by FINRA.”

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit frankowskifirm.com.

Tiger Woods Foundation Inc. and Tiger Woods Charity Event Corp., charities founded by golfing legend Tiger Woods, may be sued for unknowingly receiving donations acquired from a Ponzi scheme. The organizations received $500,000 in charitable donations from R. Allen Stanford’s Ponzi scheme and were unable to sway a federal judge to dismiss a suit seeking to recover the donations as fraudulent transfers.

Under other circumstances, receiving such funds would not constitute a fraudulent transfer. For instance, if the operator of a Ponzi scheme buys goods or services, the payments are not fraudulent because consideration was given in return. Since charitable organizations do not necessarily provide consideration for receiving donations, these donations can be fraudulent transfers.

The charities argued in front of U.S. District Judge David C. Godbey in Dallas that the Stanford trustee’s claims were time barred. Godbey, however, disagreed and denied the charities’ request for dismissal earlier this month, finding that the trustee sufficiently showed a basis for reliance on the discovery rule.

That rule provides an exception for statutes of limitations giving the trustee one more year to sue after he discovered or could have discovered the payment. He realized that the charities received contributions when his team found an article mentioning that Stanford was a sponsor. Godbey stated that it was “perfectly reasonable to surmise that the generally complex and obfuscated nature of the Stanford financial records made these particular transfers difficult to discover.”

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit frankowskifirm.com.

David Boden, an ex-Rothstein Rosenfeldt Adler PA attorney pleaded guilty yesterday in a Florida federal court to one count of wire fraud in connection to Scott Rothstein’s $1.2 billion Ponzi scheme. Boden admitted that he played a role in causing investors to lose $2.4 million. He also pleaded guilty to one count of conspiracy to commit wire fraud, stating that he acquired commissions straight from a group investing in Rothstein’s scheme but failed to disclose to the group that he was also receiving commissions from Rothstein. Richard L. Pearson, the broker involved in the scheme, also pleaded guilty to a count of wire fraud last week.

Boden and Pearson are looking at potential maximum sentences of five years imprisonment and may be forced to pay up to $250,000 in restitution. They will both be sentenced on January 9, 2015.

Boden had been brought on as a nonequity shareholder at Rothstein Rosenfeldt Adler in 2008. Pearson came in roughly a year later as a broker for settlements Rothstein offered to investors. Rothstein gave investors the opportunity to provide possible plaintiffs in sexual harassment and other lawsuits an upfront payment in turn for the right to cash in on bigger settlement installments. Those settlements, however, never existed. Boden, allegedly, assisted Pearson in the selling of the settlements and received a portion of Pearson’s commission.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit frankowskifirm.com.

Noah Myers, a financial adviser from Lyme, Connecticut, pleaded guilty in federal court this week to defrauding a number of his client through what is called a “cherry-picking” securities fraud. Myers waived his right to indictment and entered his plea before U.S. District Judge Stefan Underhill in Bridgeport, Connecticut.

Myers, who was first investigated by the SEC in 2012, was the sole owner of MiddleCove Capital, LLC in Essex, Connecticut. He admitted to taking profits from successful investments for himself and favored accounts while giving losses to disfavored accounts. This process was made possible as Myers would wait to assign a trade to an account until after he determined the investment was profitable, a practice known as “cherry-picking.”

Myers scheme resulted in client losses of over $2 million. Simultaneously, as the SEC alleges, Myers made off with $460,000. What makes the matter worse is that a number of Myers’ clients who lost their funds were retired or were utilizing their accounts to save for retirement funds and had requested low-risk investments.

The lid came off the scheme in 2010 when MiddleCove employees were notified of possible illegal trades through a computer program designed to find favorable allocation of profitable day trades.

The U.S. Attorney’s office defines cherry-picking as a “fraudulent securities trading practice in which the responsible individual executes trades without assigning those trades to a particular trading account until the individual determines whether or not the trade has become profitable or suffered losses.” The trader then “allocates profitable trades to favored accounts – often the individual’s own account – and assigns unprofitable trades to disfavored accounts.”

Myers pleaded guilty to one count of securities fraud and is looking at a maximum sentence of twenty years, plus a fine of as much as $5 million. He will be sentenced January 12, 2015.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit frankowskifirm.com.

Currently, the SEC defines an accredited investor a someone who either has an income of at least $200,000 ($300,000 for couples) or a net worth of at least $1 million, without including the individual or couple’s primary residence. Some feel that this definition is archaic and poorly suited to prevented “unsophisticated” investors from making unsuitable investments.

These proponents of a rule-change argue that financial thresholds do not give enough protection to investors whose net worth is based on retirement savings or non-liquid holdings. They would like to see the SEC upgrade the definition in such a way that expands the potential pool of investors and reinforces verification that they qualify.

In 2012, the SEC estimated the private placement market to be about $1.6 trillion. That number has assuredly risen since then, meaning that much money is at issue here.

The SEC is certainly making attempts to change the definition. A couple of weeks ago, all except one member of the SEC Investor Committee voted to suggest that the SEC throw out the income and net-worth floors and rather consider a definition of a sophisticated investor that bears in mind a person’s education, professional credentials, and experience in investing.

The committee is also considering the creation of a financial-sophistication test. The committee has stated that if the SEC decides that to keep income and net-worth criteria, the SEC should limit participation in private placements to a particular percentage of an investor’s income or assets.

The committee additionally suggested that responsibility for verifying accredited investor status move from securities issuers to third parties. These third parties may include brokers, investment advisers, accountants, and attorneys.

Proponents of a new rule assert that creating a fresh standard to decide whether a person can and should invest in private placements will tremendously help prevent those who can least afford serious losses safe from financial ruin.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit frankowskifirm.com.

The U.S. Supreme Court decided yesterday that it would not hear appeals from two former senior executives of Duane Reade Inc. The appeals follow the executives’ 2010 securities fraud convictions for inflating earnings at the New York-based pharmacy chain.

Anthony Cuti, Duane Reade’s former CEO, and William Tennant, the company’s CFO, both requested that the 2nd Circuit Court of Appeals dismiss their convictions, arguing that testimony from accountants used at trial should not have been admitted into evidence on the grounds that they were not experts able to offer expert testimony. The court rejected this argument and upheld the convictions.

In June 2010, a federal jury in Manhattan found Cuti and Tennant guilty of operating a scheme to falsely inflate Duane Reade’s earnings from 2000 to 2004. Cuti was found guilty of securities fraud, conspiracy to commit securities fraud, and making false statements to the SEC and was sentenced in August 2011 to three years imprisonment and a fine of $5 million. Tennant was convicted of securities fraud and sentenced to time served and a fine of $10,000.

Federal authorities believe the scheme led to misrepresentations being made to shareholders and private equity firm Oak Hill Capital Partners, which purchased Duane Reade a decade ago. Oak Hill then sold the company to Walgreen Co. for $614 million in 2010.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit frankowskifirm.com.

Louis Gallo, former vice president of Commodities Online LLC, a Florida-based investment company, was sentenced last week to fourteen years imprisonment and ordered to pay nearly $20 million in restitution for his participation in a $21 million invest fraud. Gallo’s sentence will additionally include three years of supervised release after he is released from prison. Finally, he will have to forfeit a criminal money judgment of $21.6 million as well as his interest in a car, two bank accounts, and three properties.

Gallo pleaded guilty in August to one count of conspiracy to commit mail and wire fraud. From January 2010 to April 2011, Gallo allegedly conned over 700 investors out of $21 million. James C. Howard III, Commodities Online’s co-founder, had already pleaded guilty to his role in the scheme and was sentenced to fifteen years and nine months and forced to pay $18.9 million in restitution. Rita E. Balbirer received twenty-one months on a money laundering charge.

Patricia S. Saa, Commodities Online’s other co-founder, still has charges pending against her. Michael R. Casey, Commodities Online’s outside legal counsel, also has charges pending against him. The Florida Supreme Court suspended his license in May after he did not show up for a hearing regarding this case.

Gallo and his co-schemers allegedly sold Commodities Online ownership units, subscriptions to Commodities Online’s website and investments in transactions to purchase and sell items such as seafood, iron ore, copper, and sugar. In addition, the group solicited “pre-sold” commodities contracts through Commodities Online’s website.

The group represented to investors that the company was profitable. However, the payments made to the first investors came from the funds of subsequent investors, the defining element of what is commonly called a Ponzi scheme. A large portion of the money was used by the group for personal expenses, including more than $2.5 million that Gallo used for himself and his family.

The group further made misrepresentations about the company’s hierarchy, telling investors after the mid-point of 2010 that Casey was president when in actuality Howard was. The group allegedly failed to alert investors that Gallo and Howard were convicted felons and that Gallo was actually still on probation. Howard had been convicted on cocaine possession and firearm charges in the Northern District of Florida, while Gallo had been convicted of cocaine possession and bank fraud charges in New Jersey.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit frankowskifirm.com.

Richard L. Pearson, a broker affiliated with Rothstein Rosenfeldt Adler PA and alleged to have played a role in Scott Rothstein’s $1.2 billion Ponzi scheme, pleaded guilty in Florida federal court to a wire fraud charge, noting that he contributed to investors losing $2.4 million.

Pearson and Rothstein Rosenfeldt Adler attorney David Boden had each been charged with one count of conspiracy to commit wire fraud, admitting that they received commissions directly from a group investing in Rothstein’s scheme without informing the investors that Rothstein paid them an additional commission.

Federal authorities plan to show, if the case goes to trial, that the group invested roughly $3.3 million with Rothstein, paying a commission directly to Pearson who also received a commission from Rothstein. In sum, the investors were allegedly scammed out of $2.4 million because of Boden and Pearson’s misrepresentations and omissions.

Pearson will face a maximum of five years imprisonment and could be ordered to pay as much as $250,000 in restitution, according to his plea deal. He will be sentenced on January 9, 2015.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit frankowskifirm.com.