Articles Posted in Ponzi Schemes

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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