Articles Posted in Ponzi Schemes

Chicago-based Stoltmann Law Offices is representing investors who’ve suffered losses from dealing with broker-advisors who have run Ponzi schemes right under their big-bank firm’s nose. Unscrupulous financial advisors have been known to steal clients’ money to pay for their lifestyle. As they are pocketing investors’ funds, they are often pitching  investments like Ponzi schemes, which are fake and fraudulent investment schemes fueled by money flowing in from new investors.

Shawn E. Good, 55, from Wilmington, North Carolina, a former Morgan Stanley advisor, had “clients send funds to his personal bank account to supposedly make low-risk investments in real-estate development projects,” according to a U.S. Securities and Exchange Commission (SEC) complaint filed in federal court. “Good defrauded investors — including retirees — out of at least $4.8 million, resulting in more than $2 million of losses,”  the SEC said.

A spokesperson for Morgan Stanley told Advisorhub.com the bank “is reviewing the matter and that the alleged conduct is plainly unacceptable. Good is no longer employed by the bank.” The Morgan spokesman added “We are currently reviewing the matter, which affects a small number of clients, and are cooperating with the SEC and other government authorities.”

Stoltmann Law Offices, P.C. is a Chicago-based investor-rights and consumer protection law firm offering representation nationwide on a contingency fee basis to defrauded investors and consumers alike. If you are a victim of the alleged Ponzi scheme perpetrated by former Morgan Stanley financial advisor Shawn Good, you likely have sustainable legal claims against Morgan Stanley.  It is critical to your chances to recover what was taken from you to consider all legal options and to not depend on the Securities and Exchange Commission or criminal prosecutors to make you whole.

The attorneys at Stoltmann Law Offices have over fifty years of combined experience representing victims of Ponzi schemes. According to published reports, Shawn Good is alleged to have stolen millions of dollars from victims of a scam he ran while he was a financial advisor at Morgan Stanley.  The SEC has filed a civil complaint against Good, and Morgan Stanely fired him in February for failing to cooperate with an internal investigation in connection with his scheme.

Morgan Stanley can be held liable for Shawn Good’s scheme for two primary reasons.  First, as an agent of Morgan Stanley, the company is responsible for Good’s conduct in the course and scope of that employment. Sure, running a criminal scheme is not necessarily what his employment with Morgan Stanley was about, but offering investment advice and financial services was.  You are not seeking to hold Morgan Stanley liable because Good broke into a jewelry store, the agency liability stems from Good’s solicitation to invest in securities and products in furtherance of providing investment advice. That falls squarely inside the agency relationship with Morgan Stanley.

Chicago-based Stoltmann Law Offices represents investors nationwide on a contingency fee basis who’ve been victimized by Ponzi schemes. One of the most notorious Ponzi schemes in recent years involved Horizon Private Equity, which bilked some $110 million from 400 investors. The operators of the scheme have been sued by investors in a class action lawsuit, but some investors have viable individual claims to pursue against Oppenheimer through FINRA Arbitration. The fund was sold by brokers at Oppenheimer.

An investor class-action suit claims “Oppenheimer management, from 2008 through December 31, 2016, actively aided” John J. Woods (the lead seller for Horizon); his brother, defendant James Wallace Woods; and their cousin, defendant Michael J. Mooney, each a financial adviser at the firm, with funneling investor money into Horizon.” The Horizon scheme “continued to raise money from unsuspecting investors through Southport Capital, a registered investment advisory firm, for nearly five more years,” the suit alleges. The alleged Ponzi scheme, according to the suit, “made no significant profits from legitimate investments, and `returns’ to investors came instead from new investor money.”

On August 20 2021, the U.S. Securities and Exchange Commission (SEC) filed an emergency action against Woods, Southport Capital and Horizon Private Equity, III, LLC for “alleged violations of federal securities fraud, with the intent of freezing the parties’ assets, appointing a receiver and gaining a full accounting of the finances involved.”

Stoltmann Law Offices, P.C., a Chicago-based securities and investment fraud law firm with offices throughout the Chicago-land area, is investigating claims made by the United States against Ronald T. Molo.  It is important to realize the allegations made by the US Attorney are unproven and Mr. Molo is entitled to a presumption of innocence until provide guilty.  Molo has been indicted on six counts of wire fraud, which means money was transmitted electronically for fraudulent purposes, simply put.  According to the indictment, Mr. Molo was a Financial Advisor for a “national financial services firm,” working from an office in Joliet.

According to his FINRA BrokerCheck Report, Mr. Molo was a licensed financial advisor with Edward Jones & Company from May 2001 to June 2021 when he was terminated for cause. According to Edward Jones, Mr. Molo was terminated because customer funds were transferred to outside accounts in his control after soliciting some purported investment opportunity.  The BrokeCheck Report also shows that Edward Jones has already paid out $875,000 to victims of this alleged fraud to settle claims.  The allegations in the indictment support the contentions made by Edward Jones when it terminated Mr. Molo.  According to the Indictment, Molo, who the grand jury found had fiduciary duties to his clients, falsely advised multiple clients that he had a good investment opportunity for them. The investment allegedly was some sort of tax-exempt, interest-bearing bonds.  He advised these clients that the investment opportunity would pay regular, periodic interest at 5%, that the interest would be tax-exempt, like a municipal bond, and was being offered through reputably investment houses like Lord Abbett, Spire Investment Partners, and Ivory Stone Investment Partners.  None of this was true, alleges the Indictment, and Molo knew his representations were untrue and made with intent to defraud. Molo had his clients, it has been alleged, execute authorizations to transfer funds from their Edward Jones accounts to an outside account, which unbeknownst to the victims, was an account Molo controlled personally.

This case is another example of a Ponzi scheme that lacks one of the most well-known hallmarks of one – the “it sounds too good to be true” concept.  Molo’s alleged scam offered 5% interest per year, not 50% or some other unrealistic on  its face return.  Many Ponzi schemes involve alleged investments that offer outlandish or unrealistic returns.  Bernie Madoff changed this perception and is one of the many reasons why his scheme lasted so long and did so much damage.  Bernie Madoff never provided outlandish returns to his clients, only stable, consistent returns for years.  Brokerage firms like Edward Jones have legal duties and responsibilities to supervise the conduct of their licensed representatives. The securities industry is heavily regulated at both the state and federal level, and many of these regulations have to do with supervision and compliance. Money being sent out of a client account to an unaffiliated 3rd party account is a huge red flag and implicates anti-money laundering rules and regulations, which are very serious issues for brokerage firms like Edward Jones.

Stoltmann Law Offices, P.C. is a Chicago-based securities and investor rights law firm that offers representation on a contingency fee basis to victims of investment fraud nationwide. On August 20, 2021, the Securities and Exchange Commission (SEC) filed a complaint in United States District Court for the Northern District of Georgia (Atlanta) alleging that John Woods “has been running a massive Ponzi scheme for over a decade.” That is the first line of the complaint, which goes on to allege that more than 400 investors are owed over $110,000,000 on alleged investments in Horizon Private Equity Group, III, LLC.  The complaint also names Livingston Group Asset Management Company, d/b/a Southport Capital, which is a registered investment adviser firm owned and controlled by John Woods.

The sales pitch for these investments in Horizon promised returns of 6-7% interest guaranteed for 2 or 3 years.  These are not the sort of huge returns typically promised in a Ponzi scheme. In fact, these are pretty low returns when compared to the rate of return on the S&P 500 or even alternative investments like non-Traded REITs.  Ironically, now disgraced GPB Capital – which is also alleged by the SEC to be a massive Ponzi scheme, promised returns of 8%.  This sort of Ponzi scheme is more incendiary and falls into the Bernie Madoff category of promising lower, but consistent, rates of return. Investors who are victims of a Ponzi scheme promising 6-7% returns cannot say they should have known better because it was too good to be true.  Woods and his RIA represented that they would take investor funds and invest them in government bonds, stocks, and real estate projects. Investors were never told their money would be used to pay interest to earlier investors, which is what the SEC alleged they did on a massive scale. Horizon did not earn nearly enough returns through legitimate investments to pay investor interest payments and as such had to rely on new investor money to maintain those interest payments – a hallmark of a Ponzi scheme.

Victims need to look to potentially liable third parties for recovery while the SEC freezes Woods’ and Horizon’s assets and begins an accounting process that will likely take years.  The first target could be Oppenheimer.  According to the SEC complaint and FINRA, Woods was a registered representative for Oppenheimer until he was “asked to resign” in 2016 for failing to accurately disclose his involvement with Southport and Horizon. Many of his Oppenheimer clients invested in Southport and Horizon and unless Oppenheimer reached out to each of those clients and warned them that what Woods was doing was, at a minimum, not fully disclosed to Oppenheimer in violation of FINRA rules, then Oppenheimer could have liability to victims here.  Further, the SEC complaint states that Horizon primarily used two banks to move money, Bank of America and Iberiabank. They also used a custodial trust company.  These entities, depending on the details of their involvement, could also have liability to victims of this scam.

Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses in Ponzi schemes.  All of the most egregious swindles start out with a simple dual promise: High returns and no risk. That was the case with JJMT investments, which sold bogus promissory notes.

Started by fraternity brothers from Indiana University, JJMT lured investors with 30% to 40% returns on notes that financed movie deals in Hollywood.  According to Bloomberg, “Zachary Horwitz, a former actor, duped his old college friends and their families out of tens of millions of dollars. Three of Horwitz’s buddies from Indiana University said he tricked them into providing him with hundreds of millions of dollars in loans to fund bogus Latin American licensing deals with Netflix Inc. and HBO.”

From mid 2015 to late 2019, “JJMT Capital provided financing to Horwitz’s company 1inMM in exchange for promissory notes with a total principal value of approximately $485 million, Bloomberg stated. Horwitz’s company still allegedly owes investors “around $165 million before interest – including more than $42 million of their own money.”

Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses from fraudulent investments scams for over fifteen years.  Recently, common scams involve precious metals and the latest craze, cryptocurrency. When the price of any commodity goes up dramatically – from gold to digital cryptocurrencies – you can bank on the fact that scammers are pitching hard to lure investors into a trap. Many investments pitched on the internet fall into this murky pool.

The top threats to investors, not surprisingly, are Internet- and social-media based promotions, according to the North American Securities Administrators Association (NASAA), a securities regulator trade association. These frauds are often pitched to owners of self-directed Individual Retirement Accounts (IRAs), many of which are tied to brokerage services.

“Self-directed individual retirement accounts, which lack the services and protection of traditional IRAs, can be fertile soil for scammers, especially those involving cryptocurrency-related and precious metals-based investments,” Investment News reported.

Stoltmann Law Offices previously posted about Scott Wayne Reed, former broker at Wells Fargo Advisors, selling away to his customers, including customers of Wells Fargo. On December 15, 2020, the Arizona Corporation Commission filed a “Notice of Opportunity for Hearing Regarding Proposed Order to Cease and Desist, Order for Restitution, Order for Administrative Penalties, Order for Revocation and Order for Other Affirmative Action” against Reed, his wife, Sarah Reed, Pebblekick, Inc. and Don K. Shiroishi, the Chief Executive Officer and President of Pebblekick.

According to the ACC’s notice, Mr. Reed sold at least $3.5 million of investments in short-term, high-interest notes issued by Pebblekick. Mr. Reed sold these notes as offering an annualized rate of return of sixty-percent (60%). In turn, Pebblekick paid at least $191,340 to Reed. He sold these notes to clients as “100% safe” investments and represented that he also invested in Pebblekick. He went as far as personally guaranteeing $100,000 of the $200,000 investment made by one investor.Reed also sold other outside investment to customers, which he alleged were connected to Pebblekick, including but not limited to Precision Surgical, Mako Studio, and Ascensive Creator.

Reed was a registered representative of Wells Fargo Advisors at the time that he sold this investment, but did not disclose that he was selling notes in Pebblekick or that he received nearly $200,000 in commissions and fees for selling Pebblekick. According to the ACC, “when Reed’s firm reported him for potentially selling away and the Securities Division requested Reed to provide information and documents concerning the allegation, Reed impeded the Division’s investigation by providing responses that were false, incomplete, and misleading.”

Stoltmann Law Offices is investigating allegations in a grand jury indictment in the United States District Court for the Eastern District of Texas, levied against Keith Todd Ashley, of Collin County, Texas.  According to the indictment, which was filed on November 13, 2020, Ashley ran a Ponzi scheme while a registered representative for Parkland Securities, formally known Sammons Securities Company, and Midland National, a life insurance and annuity company. According to the indictment, Ashley recommended investors purchase UITs (Unit Investment Trusts) through Parkland and another entity called SmartTrust, which was an investment offered by another brokerage firm, Hennion & Walsh. The indictment alleges that Ashley made representations via email to clients that these investments offered returns of anywhere between 3% and 9% per year, with no risk to the investor’s principal, and that the securities were offered through Parkland and SmartTrust.  The indictment further alleges that instead of investing the money as represented, Ashley converted a substantial amount of it – more than $1 million – for his own use.

If you invested with Keith Ashley and believe you have suffered losses in connection with his alleged Ponzi scheme, please contact Stoltmann Law Offices, at 312-332-4200 for a free, no obligation consultation with a securities attorney.  

The news in connection with Mr. Ashley and his scheme turned quite dark just this afternoon when the publication Investment News ran a story indicating that Ashley was arrested in Carrolton,Texas on suspicion of committing murder. The story reports that Ashley is accused of murdering an investor-client in February 2020, staging the murder as a suicide, in some attempt to gain access to the victim’s money. Ashley was discharged from Parkland Securities in October suggesting he was fired for failing to disclose outside business activities.  This is a common response by brokerage firms when it turns out that one of their registered representatives has been running a Ponzi scheme.

Barrington, Illinois based Stoltmann Law Offices has been retained by victims of Matthew Piercey’s alleged Ponzi scheme involving Wealth Legacy, UpVesting Fund, Zolla Investment Fund, amongst other alleged investments, to pursue claims against potentially liable third parties. Matthew Piercey was arrested at Lake Shasta, California after attempting to evade the FBI using an underwater scooter. Piercey was arrested and indicted on 31 counts of wire fraud, money laundering, mail fraud, and witness tampering. Piercey is alleged to have orchestrated a $30 million Ponzi scheme, converting investor funds that were supposed to be invested in supposedly legitimate investment vehicles, like the Zolla Investment Fund.  Piercey’s alleged co-conspirator, Ken Winton, was arrested separately, although under less dramatic circumstances.

Victims of Matthew Piercey’s Ponzi scheme may have claims against third-parties to recover their losses. Pursuing Matthew Piercey directly in a lawsuit to recover is probably a fool’s errand. Once the criminal justice system is through with him, there won’t be anything left. Sure, assuming he is found guilty of these heinous crimes, he will be ordered to make restitution to victims, but the money is gone and his earning capacity will be destroyed.  So victims need to look to third parties for recovery.

If you were referred to Matthew Piercey or Ken Winton by a lawyer, a financial advisor, a wealth manager, or a CPA or accountant, those individuals could be liable to you for the losses you have sustained as a result of Piercey’s alleged schemes. 

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