Articles Tagged with Paulson Investment Company

Stoltmann Law Offices is a Chicago-based securities and investment fraud law firm that offers nationwide representation to victims of Ponzi schemes and other securities frauds.  We are currently investigating allegations made by the United States Securities and Exchange Commission (SEC) and the US Attorney for the Southern District of New York that contend the Belize Infrastructure Fund I, LLC was a Ponzi scheme.  According to published reports, Minish “Joe” Hede and Kevin Graetz sold $9.6 million worth of promissory notes to their clients, many of whom were customers of their brokerage/dealer firm Paulson Investment Company.

According to the complaint filed by the SEC, Brent Borland, the principal of the Belize Infrastructure Fund who is also under indictment, approached Paulson Investment Company to act as “placement agent” for this fund. After the sales pitch, Paulson declined to act as the placement agent and disapproved of the investment. Whether Paulson Investment Company approved of the deal or not, meant nothing to Hede and Graetz who went on to sell almost $10 million worth of notes issued by the bogus company to at least 21 Paulson clients.  In so doing, Graetz and Hede violated numerous FINRA Rules and SEC rules and regulations by selling a fund that was not approved of by their broker dealer.  The SEC complaint also alleged that Hede and Graetz received hundreds of thousands of dollars in illicit commissions from selling notes issued by the Belize Infrastructure Fund.

Paulson Investment Company can still be held liable for the conduct of the firm’s registered brokers, Hede and Graetz. First, even though Paulson Investment did not formally approve of these sales, Hede and Graetz were still registered with the firm as brokers when these sales occurred so that means Paulson had an obligation to supervise their activities pursuant to FINRA Rule 3010. Additionally, “red-flags” that brokers may be “selling away” increase that responsibility. Certainly, having sold almost $10 million in this fund to 21 Paulson clients means there was, at a minimum: 1) a paper trail that they were selling these notes; 2) communications via email discussing the Belize fund; 3) transactional records, including the sale of securities in the clients’ legitimate Paulson accounts in order to fund the Belize Fund investments; and 4) client meetings.  Furthermore, brokers with numerous disclosures on their CRD Report require firms to put those advisors on “heightened supervision.”  According to his FINRA BrokerCheck Report, Graetz had numerous tax liens and customer complaints on his record before he started selling the Belize Fund to his clients.  Paulson Investment Company should have had him under a supervisory microscope. Instead, as is typical at brokerage firms like Paulson, the company invests minimally in its compliance and supervisory structure and brokers like Graetz and Hede end up selling firm clients almost $10 million in a Ponzi scheme.

AdobeStock_35532974-1-300x200According to a Disciplinary Proceeding with the Financial Industry Regulatory Authority (FINRA), Brian Panfil, a former registered broker with Caldwell International Securities, allegedly engaged in a pattern of mutual fund switches. He did so by using his discretion to place mutual fund trades without obtaining specific customer approval beforehand. He allegedly exercised discretion and affected hundreds of short-term mutual fund transactions in Class A share mutual funds in the accounts of four customers. He solicited the majority of the trades and allegedly forged customer signatures on forms required to affect mutual-fund switches, failed to disclose the costs and fees associated with his short-term trading and withheld from his customers materials that would have identified those costs and fees. This caused four customers to make at least 24 switch transactions that were unsuitable because they resulted in these customers paying at least $27,924 in excessive sales charges and other fees. This is against securities rules and regulations.
Prior to being registered with Caldwell International, Panfil was a broker with American Century Investment Services, IDS Life Insurance Company, Ameriprise, Caldwell in Nassau from March 2006 until September 2013, Ridgeway & Conger, Institutional Securities Corp, Kingsbury Capital, and Paulson Investment Company in Chicago, Illinois from August 2015 until November 2015. He has one criminal final disposition against him. He is not currently registered as a broker, according to his online, public report with FINRA.

AdobeStock_66548440-1-300x169Stoltmann Law Offices is investigating Donald Wojnowski, a registered representative with Paulson Investment Company in New York, New York. Wojnowski was accused of failing to supervise a representative, churning investments, executing unauthorized trades, making unsuitable recommendations and breaching fiduciary duty, among other things. Churning is a particularly egregious transgression, because it is excessive trading in a customer’s account and it is a tactic used by brokers to generate large commissions for themselves.

Wojnowski was previously registered with E.F. Hutton & Company, Dean Witter Reynolds, International Assets Advisory, Meyers Associates, Newport Coast Securities and Halen Capital. He is currently registered with Paulson Investment Company in New York, New York and has five customer disputes against him. You may be able to bring a claim against Paulson in the Financial Industry Regulatory Authority (FINRA) arbitration forum on a contingency fee basis if you suffered losses with Mr. Wojnowski. The call is free with no obligation. We are based in Chicago, Illinois.

A former Morgan Stanley broker, Galen Marsh, pleaded guilty to accessing the bank’s computer network without permission. Marsh transferred confidential information on 730,000 customers to a private server in his New Jersey home from June 2011 to December 2014. 900 of the client’s information then turned up on an external website. The data was then promptly removed. Marsh will be sentenced December 7th. He is currently free on a $200,000 bond. Marsh was registered with Paulson Investment Company in Summit, New Jersey from February 2007 until April 2007, Bear, Stearns & Co. in New York, New York from May 2007 until March 2008, and Morgan Stanley in New York from April 2008 until January 2015. He is not licensed within the industry. If you had personal information hacked at Morgan Stanley, please call our securities law office at 312-332-4200 to speak to an attorney. The call is free with no obligation. You may be able to sue Morgan Stanley.

Stoltmann Law Offices is investigating Mark Weindling, a barred broker who was formerly with JHS Capital Advisors. Weindling was accused of failing to respond to a Financial Industry Regulatory Authority (FINRA) request to provide information and documents regarding an investigation of him. Weindling allegedly effected transactions in the account of a deceased customer and was aware of journal requests containing the forged signature of the same customer. Weindling was registered with the following companies: Boettcher & Company, Dain Bosworth Inc., Piper Jaffray Inc., Elba Securities, Birchtree Financial Services, Gunnallen Financial, Paulson Investment Company, and JHS Capital Advisors in Denver, Colorado from April 2012 until May 2014. He is not licensed and has been permanently barred from the industry. If you would like to find out how to hold JHS Capital Advisors liable for Weindling’s transgressions, please call us at 312-332-4200 to speak to an attorney about your options. They can be held responsible for investment losses because the firm was supposed to supervise him while he was employed there.

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