Stoltmann Law Offices, P.C. is a Chicago-based securities and consumer protection law firm offering nationwide representation to investors and victims of fraud nationwide on a contingency fee basis.  Recently, we were contacted by an investor/client who was sold a basket of structured notes offered by RBC Capital. He’s a retired investor and believed what he was sold was suitable, offered a stable and fairly high interest rate, which was important because he is on a fixed income, and that the note had down-side protection.  He was made to believe these important facts because his trusted financial advisor pitched these products to him this way. In reality, the structured notes he was sold were speculative, extremely complicated, conflicted proprietary products.

The investment at issue is called the:

Auto-Callable Contingent Coupon Barrier Notes Linked to the Common Stock of Teladoc Health, Inc., Due July 3, 2024

Chicago-based Stoltmann Law Offices is representing investors who’ve suffered losses from getting fleeced in Ponzi schemes. All too often, financial advisors assign fancy names to “investments” that turn out to be swindles. The Securities and Exchange Commission (SEC) filed suit against Michael Mooney, Britt Wright, and Penny Flippen in connection with their participation in a Ponzi scheme that raised more than $110 million from approximately 400 investors.

The former representatives of Livingston Group Asset Management Company (doing business as Southport Capital), “recommended clients invest at least $62 million in `Horizon Private Equity III.’ Horizon was billed as a private fund controlled by John Woods, Southport’s former owner and manager.” In August 2021, the SEC charged Woods and Southport with multiple counts of securities fraud for operating Horizon as a Ponzi scheme, according to thediwire.com.

As with many, if not most, Ponzi schemes, the fake investments were marketed heavily to older clients, who thought they were legitimate. According to the SEC, “many of the defendants’ clients were elderly and inexperienced investors who communicated that they wanted safe investment opportunities for their assets, a large percentage of which were earmarked for retirement.”

Chicago-based Stoltmann Law Offices is representing clients who’ve been the victims of cybersecurity hacks. Third Parties who store and use your personal data have an obligation to keep that information secure. But in the online universe, cyberthieves are working 24/7 to steal this valuable commodity. Stolen data is bought and sold on the internet’s black market and used by other scamsters to open credit accounts with stolen identities.

Aon Corporation, the massive global insurance company, was recently hit with a class-action lawsuit over a cyber-hacking incident, or “data breach,” that allegedly lasted more than a year.  “The 25-page lawsuit comes after Aon revealed that it had been hit by a data breach that went undetected for over a year, from late December 2020 to February 2022, according to class-action.org. Per the complaint, cybercriminals breached the company’s systems to access insurance files containing consumers’ names, addresses, dates of birth, Social Security and driver’s license numbers and, in some cases, benefit enrollment information.”

The lawsuit also claims that Aon “lacked the security necessary to prevent such a hack” or stop unauthorized parties from stealing consumers’ personally identifiable information. Per the suit, Aon has disregarded consumers’ privacy rights and exposed their information to a heightened risk of misuse.” According to the complaint, Aon’s data breach notice “deliberately underplayed the severity of the breach and misrepresented that the insurer had no evidence cybercriminals had copied, retained, or shared the data, even though Aon knew cybercriminals had accessed its files for an extended period.” The suit states “Aon has offered data breach victims only 24 months of free credit monitoring services “despite the significant [personally identifiable information] that was compromised over a two-year period.”

Stoltmann Law Offices, P.C. represents investors who have lost cryptocurrency as a result of hacks and theft from their accounts.  In December 2021, a security breach at crypto-exchange BitMart resulted in customers losing more than $200 million in cryptocurrency.  What is newsworthy, is that since May 2022, the Federal Trade Commission has been investigating BitMart in connection with this hacking incident.  According to court filings, the FTC is evaluating 1) whether BitMart engaged in deceptive, unfair, or otherwise unlawful acts or practices regarding the marketing and representations made by BitMart to its clients about account security, in violation of Section 5 of the FTC Act, 15 U.S.C. Section 45; and 2) violations of Gramm Leach Bliley Act, 15 U.S.C. Sections 6801-27, which is a federal law that, amongst other things, requires financial institutions to protect the private information of its customers.

This investigation is significant because it is reportedly the first time the FTC has investigated the crypto-exchange market. Surely, the ten-fold increase in crypto-related hacks and identity thefts from 2020-2021, has drawn the attention of the FTC, which investigates scams and identity thefts on behalf of consumers. Also significant is the possible application of the Gramm-Leach-Bliley Act to crypto-currency exchanges.  Since their inception, exchanges like Coinbase, Voyager, and Gemini, to name a few, have heavily lobbied Washington to stay out of their business.  These exchanges are profit centers for their owners and shareholders and they do not need layers of consumer protection regulations to crimp their style. Recently, as hacking, identity theft incidents, and bankruptcies rock the crypto-exchange world, whispers of CFTC and SEC regulations are becoming calls for action.

Crypto-Exchanges argue consistently that cryptocurrencies like Bitcoin are not securities – because if they are, then the purchase, sale, and exchange of Bitcoin will have to be handled like any securities transaction offered through a brokerage firm. What’s the big deal?  Securities Exchange registration would require companies like Coinbase to spend exponentially more money on compliance, surveillance, and supervision of accounts to ensure record keeping, and security, as opposed to taking all that money they generate in transaction fees, and allowing their founder to buy the most expensive real estate in Los Angeles County.  Notwithstanding all of the representations about account security and how crypto-exchanges prioritize account security, their resistance to registering as securities brokers/dealers should tell consumers all they need to know about how they prioritize consumer protections over profit.

Chicago-based Stoltmann Law Offices is investigating allegations made by the United States Securities and Exchange Commission (SEC) regarding former LPL Financial Advisor Eric Hollifield and stealing over $1 million from a client.  This is not the first time an LPL financial advisor has been caught red-handed stealing from LPL firm clients. Given the independent contractor model employed by LPL Financial over its financial advisors, these sorts of scams are all too easy to pull off and continue to happen.

According to the SEC’s complaint, Hollifield, who worked out of Dacula, Georgia, executed several fraudulent ruses designed to hide his true intent. First, he solicited investors to put money into a company called Century Warehouse, Inc., which was allegedly involved in the warehousing and shipping industry. From October 2019 through October 2020, Hollifield is alleged to have raised $5.35 million from advisory clients for Century Warehouse. Hollifield’s alleged fraud were his representations to investors that Century intended to use investors funds to buy PPE and other COVID-related supplies for the benefit of veterans.  According to the SEC, at least $1 million of the money raised from investors went back to Hollifield’s bank account where he spent the money on personal expenses.  The SEC also alleges that Hollifield used $1.7 million in misappropriated investor money to purchase a home sitting on 37 acres in Winder, Georgia.  The SEC alleges further that Hollifield lied to a client about setting up a “high yield” account at Goldman Sachs and instead stole the money.

There are two primary compliance and supervisory models that have existed in the brokerage industry for decades.  The first is the one most people think of when they hear the term “brokerage firm”.  They envision a huge office with fifty cubicles and telephones ringing. This office model is still common in the large “wire house” brokerages like Merrill Lynch and Morgan Stanley. In that structure, a branch manager is stationed at his post on-sight, reviews all incoming and outgoing correspondence, reviews a daily trade blotter, and reviews a daily transaction ledger that shows all checks sent and received for accounts in his branch. This branch manager wanders the office, peaks over shoulders, and should ensure his brokers are living up to the standards of a licensed securities broker.

Chicago based Stoltmann Law Offices represents victims of identity and data-breaches nationwide in class representation or FINRA arbitration to recover damages caused from data breaches by brokerage firms, investment companies, and other institutions which are obligated to keep your private information safe.  We are currently investigating claims made by the Maine Attorney General’s office which was reported this week against Cetera Financial Group.  According to the the report, the Social Security numbers of 2,188 Cetera clients were potentially exposed when a printer company used by Cetera, R.R. Donnelly, was reportedly hacked.

The cybersecurity of proprietary information for brokerage firm clients is a huge issue for regulators. As the world continues to be run through electronic means using the internet and electronic storage networks, the security of those systems is of paramount importance.  Hackers gain access to this information and then sell it en masse on the dark web to criminals who will use the credentials they obtain to hack into the personal financial accounts and cellular phone accounts of unsuspecting victims sometimes to ruinous ends.  If you have been notified by Cetera that your information was potentially exposed or compromised, you have legal claims that can be pursued against both Cetera and R.R. Donnelly.  These companies have strict compliance obligations to ensure these hacks do not happen. In some instances, these hacks are the result of poor security controls and could be preventable.

In January 2021, it was reported that thousands of Voya Financial Advisors’ clients’ personal identifiable information was exposed as the result of a Russian hack. As a result of that hack, Voya Financial Advisors paid a $1 million fine to the Securities and Exchange Commission The SEC Order and fine was based on the allegations that Voya Financial lacked sufficient written policies and procedures to ensure compliance with Rule 30 of Regulation S-P, 17 C.F.R. § 248.30(a), known as the “Safeguard Rule”. The SEC also alleged that Voya Financial failed to develop and implement a written Identity Theft Prevention Program, in violation of Rule 201of Regulation S-ID, 17 C.F.R. § 248.201, which is known as the Identity Theft Red Flags Rule.

Chicago-based Stoltmann Law Offices is representing investors who’ve suffered losses from dealing with financial advisors who fleece older clients. In our practice, we’ve seen countless scams where older investors are lured into fraudulent investments. Unfortunately, investment and financial advisors frequently exploit and rip off elderly clients, who are often trusting yet vulnerable.

Common ruses involve “estate planning” seminars that come with a “free” lunch or dinner. Afterwards, brokers are known to peddle scam investments to those who show up. Lately though, investors are aggressively pitched through emails, texts and phone calls. These swindles mushroomed during the pandemic. According to the FBI, the number of scams targeting Americans over the age of 60 exploded during the pandemic, with upwards of 92,000 victims in 2021 alone involving estimated losses of nearly $2 billion, a 74% increase from 2020.

In the typical phone scam, fraudsters call older Americans, who are most likely to pick up the phone and listen to a pitch – and send money. Even former FBI and CIA director William Webster was targeted in a Jamaican lottery scam in 2014 when a caller claimed he won a sweepstakes, reports CBS News. The unsolicited caller became threatening when Webster declined to pay $50,000 to collect the winnings.  “If it can happen to me, it can happen to you,” Webster warned in a public service announcement.

Stoltmann Law Offices, P.C., is a Chicago-based investor rights law firm offering services nationwide to victims of investment fraud on a contingency fee basis. Our attorneys are currently investigating allegations raised against National Realty Investment Advisors LLC, a New Jersey-based real estate investment company. On June 7, 2022, NRIA filed for protection under Chapter 11 of the US Bankruptcy Code, Case No. 22-14539, in the Bankruptcy Court for the District of New Jersey. The court filings indicate that NRIA raised money from investors through dozens of private placement investments over several years through dozens of subsidiary-LLCs.  If you invested in one of these dozens of private placements, your investment is certainly at risk. If you were solicited by a financial advisor, investment advisor, accountant, or lawyer to invest in these private placements, you may have an actionable claim to recover your investment.

In 2021, an investigation was launched by the Securities and Exchange Commission, the Alabama Department of Securities, the New Jersey Securities Division, and the Illinois Securities Department into the working of NRIA and investor solicitations.  A whistleblower also filed a report with the SEC alleging NRIA was running a massive Ponzi scheme.  According to Barrons, the US Attorney’s office has also subpoenaed NRIA seeking testimony in front of a grand jury.  This article also points out that NRIA has over 2,000 investors holding $540 million in securities issued by NRIA and its myriad subsidiaries. In February 2021, a former employee of NRIA, Tom Salzano of NRIA was arrested by the FBI for using fake documents to try and extract money from a NRIA investor. Mr. Salzano has not been convicted and is presumed innocent.

When financial advisors or other professionals recommend private placement investments like those offered by NRIA, they have duties and obligations to their clients to fully vet the deals before the recommend them. It is likely that sufficient red flags existed about NRIA, most notably some of the outlandish representations made in commercials including on YouTube about its promised rates of return, that any professional recommending this investment could be liable to the investor for losses.

Chicago-based Stoltmann Law Offices is representing clients who’ve suffered investment losses from advisors who sold fraudulent investments products and offerings. Firms like UBS argue these are frequently, “selling away” claims, suggesting they have no liability for the wrongs of their brokers who go far afield to rip off their clients. The big banks are wrong.

UBS Financial Services is suing Robert Turner, of McGregor, Texas, on fraud allegations and is asking a judge to seize Turner’s assets to help UBS offset the cost of repaying its customers for some $17 million in losses. Turner is a former broker with UBS.

The lawsuit alleges Turner solicited at least 23 UBS customers to buy “purported investments” issued by Fairfax Financial Corporation. UBS claims the products were not authorized by the broker and didn’t know Turner was selling them. Turner, 67, worked at UBS for 25 years before going to work for Stifel, Nicolaus & Co. in October 2021. He has since resigned from Stifel and has lost his license as a financial adviser.

Chicago-based Stoltmann Law Offices represents investors who’ve suffered losses from trading risky options contracts. All too often brokers recommend trading strategies that are far too risky for their clients, who end up losing a lot of money. One such investment approach is options trading, or the right to buy or sell a security at a certain price in the future. If you guess right on an option, you can make money, provided you buy or sell at the right time at the right price. But in a volatile market, which has pretty much been standard fare the past two years, the chances of guessing right are slim.

Investors lost an estimated $1 billion trading options during the pandemic, according to fa-mag.com. Many traded off broker advice or random tips on “meme stocks” from online platforms such as Reddit. These “mom-and-pop day traders” may have lost up to $5 billion when the costs of middlemen such as market makers is tallied. Worse yet, the day traders may have lost even more on “leveraged” trades involving borrowed money.

“Turns out, taking leveraged flyers on meme stocks mentioned on Reddit’s WallStreetBets trading forum is harder than it looks,” fa-mag reported, citing a new study from the London Business School. “Spurred by Reddit posts and urged on by Twitter and TikTok influencers, daily volume in bullish contracts set record after record as stuck-at-home tinkerers flocked to the contracts in an effort to juice up returns.”

CNBC
FOX Business
The Wall Street Journal
Bloomberg
CBS
FOX News Channel
USA Today
abc NEWS
DATELINE
npr
Contact Information