Articles Posted in Ponzi Schemes

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. 

Chicago-based Stoltmann Law Offices has represented hundreds of investors who have been victims of one of the most egregious investment frauds: Ponzi schemes. These swindles promise quick riches and rely upon an increasing number of “investors” to keep the operation going, sometimes over a period of years. The schemes eventually blow up when new investors can’t be found to perpetuate it or promoters are outed by investors or associates for faking returns.

The most famous Ponzi scheme – and perhaps one of the largest – involved broker-money manager Bernie Madoff. Over a period of 17 years, Madoff defrauded thousands of investors, lying about profitable trades. In 2009, he was sentenced to 150 years in prison, after pleading guilty to a $65 billion swindle of some 65,000 victims around the world. Many of Madoff’s victims, which ranged from non-profit organizations to celebrities, were financially ruined. A court-appointed “Madoff Victims Fund” has distributed nearly $3 billion to investors. His sons, who worked for their father’s firm, turned Madoff into authorities when they learned of the scam.

Despite the notoriety of the Madoff swindle, Ponzi schemes are still ensnaring innocent investors. As one of the oldest investment fraud vehicles around, the Ponzi scheme has two selling points: Promoters promise outrageous returns in a short period of time and rely upon continuing stream of new victims to “pay off” early investors in fake profits. This perennial false promise of easy riches makes it one of the most durable schemes for dishonest brokers, who continue to sell them — until the frauds collapse.

LPL terminated financial advisor Dain F. Stokes on August 28, 2019 for selling unregistered promissory notes to clients that purported to invest in a project in Africa allegedly sponsored by Taylor Swift. According to InvestmentNews, Stokes converted at least $576,000 from two clients, whom he solicited to invest in this phony charity project, which he sold as being created by Swift to help needy people in Africa. Stokes claimed to have a close relationship with Swift, telling clients that she personally hired him to manage the finances of the Africa project and to promote a new song release by her in June 2019. He also told clients that Bill Gates was involved in the project.

The State of New Hampshire Department of State Bureau of Securities Regulation filed a petition and order against Stokes after an investor (“Investor #1”) invested $201,000 in the Africa Project between August 1, 2018 and January 25, 2019. Stokes used promissory notes to facilitate these investments. According to the promissory notes, Investor #1 would receive the return of his entire principal plus 20% interest by making this investment. Payment on the first promissory note was initially due by November 8, 2018, however the due date was continually pushed back by Stokes. At one point, he even told his client that President Donald Trump allegedly froze his assets. Stokes was ordered to pay $201,000 plus interest in restitution to Investor #1 and a $20,000 fine for violating New Hampshire Blue Sky Laws, which prohibit the fraudulent sale of securities (RSA 421-B:5-501) and the sale of unregistered securities (RSA 421-B:3-301(a)). To date, a second investor who invested $375,000 has come forward.  The New Hampshire Department of State Bureau of Securities Regulation has since frozen Stokes’ assets and issued an injunction prohibiting him from speaking with those who invested in this scam.

New Hampshire authorities interviewed Stokes, who refused to provide any details about the African charity, claiming that all information, including the name, was privileged. He also refused to reveal whether the checks, which were made payable to him personally, were invested in his personal accounts.

Stoltmann Law Offices has been investigating Northridge Holdings and Glenn Mueller on behalf of several clients over the last several months. On September 5, 2019, the Securities and Exchange Commission (SEC) filed a complaint against Glenn Mueller, Northridge Holdings, and several other Mueller-controlled companies, in the United States District Court for the Northern District of Illinois.  The complaint alleges that since at least 2014, Mueller, through his tangled web of entities, has orchestrated a veritable Ponzi scheme, raising in access of $40 million from investors based on the representation that he was purchasing properties with those funds. The truth is, Mueller has not purchased a piece of property since 2012. Instead of using investor money to purchase properties, Mueller used new investor funds to make interest and principal payments to previous investors, in class Ponzi-payment fashion. These funds were also used to pay “finders” commissions for referring new investors to Northridge. The SEC also alleges that Mueller used investor funds for personal and family use, including to make loans to family members and trade stocks and options in personal brokerage accounts.

The SEC’s allegations blow the lid off of Northridge and Mueller’s schemes. Although Mueller and his finders represented the “notes” sold by by Northridge were “secured” by property, they are not. In fact, although Mueller claims the full liquidation value of his real estate is over $100 million, he owes investors and mortgages on those properties more than that. Despite all of his representations to the contrary, Mueller and his companies are “upside-down”.  The Daily Herald also details the religion-based sale pitches used by Mueller which is an all too common hook used by schemers.

The next steps for investors is to await the appointment of a receiver. According to the docket report for this case, there is a hearing on Wednesday, September 11 during which the SEC will request the court appoint a receiver and freeze all of Mueller’s and his subsidiaries’ assets. Assuming this request is granted, which given the allegations seems likely, the receiver will begin the process of marshaling assets, selling off properties, and collecting funds to repay creditors and investors.  How long this process takes and how much money investors can expect to get out of this is anyone’s guess. The fact of the matter is, and according to the SEC, Mueller owes more money than his properties are estimated to be worth. Further, any liquidation of real estate creates a buyer’s market, so whatever purported value these properties have, they will likely be sold at a discount eventually.

FINRA permanently barred former Securities America financial advisor, Bobby Wayne Coburn (“Coburn”) on August 27, 2019 after he failed to appear at the disciplinary hearing. This came after Securities America terminated Mr. Coburn on March 20, 2019 for soliciting multiple clients to invest in an unapproved private securities transaction. He also tried to settle a complaint made by a customer without notifying the firm. According Mr. Coburn’s FINRA BrokerCheck report, the securities were in the form of promissory notes and real estate securities.

On notice of Coburn’s violations, FINRA promptly initiated an investigation into Coburn in July 2019. According to the Acceptance, Waiver, and Consent (“AWC”) FINRA entered against Coburn, Securities America learned in January 2019 that Coburn sold unregistered securities to clients in 2010 and 2011. Securities America also discovered the Coburn settled a customer complaint relating to this scheme in 2016 without providing the required notice to his firm and FINRA.  When FINRA requested documents and information from Coburn, he informed FINRA that he was no longer working in the securities industry and refused to produce the documents and information, in violation of FINRA Rule 8210. FINRA also found that Coburn violated Rule 2010, which is a “catch all” rule requiring that brokers and firms conduct business with “high standards of commercial honor” and maintain “just and equitable principles of trade”. FINRA permanently barred Coburn from the securities industries for violating these rules.

Coburn’s career in the financial services industry began in 1986 at Ameritas Investment Corp. During his thirty-three year career, he bounced from firm to firm, and landed at Securities America in January 2009. He worked from the Fort Meade, Florida branch office. Two customers have filed complaints against Coburn, including one complaint related to the real estate investment scheme. According to his BrokerCheck report, Coburn sold the client an investment in a Costa Rica real estate development, which did not make the required payments pursuant to the promissory note. The complaint for $32,000 was settled for $7,000. The entire settlement was paid by Coburn. Another client of Coburn and Securities America formally complained about an unsuitable variable annuity that Coburn sold, and the $5,000 complaint was settled for nearly $55,000, with Coburn contributing $5,000.

If you lost money with Puerto Rico financial advisor Pedro Gonzalez-Seijo, Stoltmann Law Offices may be able to help you recover these losses. Gonzalez-Seijo, a registered representative of Transamerica Financial Advisors, Inc. from September 1991 through May 2016, solicited clients to purchase variable annuities, but instead deposited their money into his personal bank account. The Securities and Exchange Commission barred Gonzalez-Seijo from the securities industry on July 5, 2019. Through its investigation, the SEC found that he stole $480,813.15 from five clients between 2013 and 2016. He pled guilty to one count of bank fraud in the criminal action that was pending against him in the United States District Court for the District of Puerto Rico on January 31, 2019.

Rather than terminate Gonzalez-Seijo, Transamerica gave him a slap on the wrist when they discovered “unauthorized check withdrawals” in client accounts and permitted him to resign. He did not register with any other broker dealer after resigning from Transamerica in May 2016 and, given the bar imposed by the SEC last week, he will no longer be allowed to work in the securities industry in any capacity. According to his FINRA BrokerCheck Report, Gonzalez-Seijo also sold life insurance and annuities through PGS Insurance, Inc. There are two client complaints disclosed on his BrokerCheck report for this scheme, one has been closed and one is pending.

Stoltmann Law Offices is highly experienced in representing investors who lost money in similar theft and selling away, or “Ponzi” schemes. You can find information on just a few of those cases in which Stoltmann Law Offices successfully recovered their clients’ stolen assets, and in some cases attorney’s fees, costs, interest and punitive damages on our website. “Selling away” is when a broker sells an investment to clients that is either unregistered, or not approved by the brokerage firm. Common forms of these alleged investments are promissory notes, bonds, and limited partnerships. Often times the advisor uses a shell company to misappropriate client funds. In some cases the advisor will even represent that he is investing the money in publicly traded stocks and mutual funds and will go as far as creating phony account statements to hide the theft. If the broker is not properly supervised by his firm, he can engage in this scheme for a long enough time period to abscond with the money, leaving their clients with nothing by the time they discover that the investment was fake.

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