Stoltmann Law Offices, P.C. is investigating claims regarding now former LPL Financial Advisor Kerry Hoffman, of Mundelein, Illinois. According to a complaint filed by the Securities and Exchange Commission on July 1, 2019, Hoffman along with a co-conspirator and convicted securities recidivist Thomas Conwell, sold investors securities in a company called GT Media, Inc. The SEC further alleges that the pair raised over $3.3 million from 46 investors, across twelve states. According to Hoffman’s FINRA BrokerCheck Report, he is currently registered as a financial advisor for Union Capital Company in Chicago, Illinois. On September 7, 2018, Hoffman was allowed to “resign” voluntarily from LPL Financial after more than 8 years with the firm. According to public filings, Hoffman’s “voluntary resignation” from LPL was in connection with raising money from clients for a private company. This wasn’t the first time Hoffman departed a place of employment under questionable circumstances. In 2007 he was discharged for cause from UBS Financial for unauthorized trading.
The allegations against Hoffman state that he sold approximately $850,000 in GT Media stock and promissory notes to five of his LPL clients. The SEC also alleges that Hoffman loaned funds to GT Media and was paid back using investor funds. The allegations made by SEC state that Hoffman failed to disclose conflicts of interest to clients to whom he sold GT Media securities and further failed to disclose he would be paid back on loans he provided to the company through investor funds.
What is really disconcerting about this scam is that Hoffman knowingly exposed his clients to Conwell and his company even though Conwell was sentenced to forty-eight months of prison time for wire fraud (see U.S. v Conwell, Case No. 03- Cr-334-1 (N.D. Ill.) and had been barred by the securities industry almost twenty years ago. (See In the Matter of Thomas V. Conwell, Exchange Act Rel. No. 43006, 72 SEC Docket 2011 (July 3, 2000). Hoffman knew about Conwell’s past because the two have known each other since they were children.
For those investors who entrusted their money to Hoffman and who were sold notes or stock in GT Media by Hoffman, you have legal recourse. At all times relevant, Hoffman was a licensed, registered representative of LPL Financial, an independent broker/dealer with more than 10,000 financial advisors. LPL has a sordid history of running afoul with regulators because of its inability to adequately supervise its financial advisors. In fact, this office has represented close to one hundred clients over the years involving Ponzi or other investment scams perpetrated right out of LPL offices by LPL registered representatives. We have tried and won arbitration cases against LPL Financial for investors involving scams perpetuated by LPL advisors. See Bedi v. LPL Financial. Our firm also has broad based experience representing investors in Ponzi scheme cases.
LPL Financial can be liable to investors who lost money in GT Media based on two distinct theories. First, LPL can be held liable directly for negligence in failing to adequately supervise Hoffman. LPL had, at all times, and iron-clad obligation to supervise Hoffman and his office and these procedures must be designed to deter and detect securities fraud violations. Clearly, and based on the experience of this firm, LPL’s procedures and execution of those procedures was sorely lacking. The second way LPL can be held liable is through agency theory or Respondeat Superior. This legal theory makes LPL liable for the conduct of its agent so long as the conduct at issue was performed within the course and scope of Hoffman’s employment. Obviously, Hoffman was selling securities and providing investment advice to clients when he solicited LPL clients to invest in GT Media.
If you or someone you know invested in GT Media, please call 312-332-4200 for no-cost-no-obligation consultation with an experienced securities attorney. We are a Chicago-based contingency fee law firm, which means we do not get paid until you do!