Articles Tagged with Royal Alliance

Chicago-based Stoltmann Law Offices, P.C. is currently investigating claims on behalf of TCA Global Credit Fund and TCA Fund Management Group investors involving Royal Alliance advisor Mark Young, and Watts Capital, LLC and Thomas Watts. On May 11, 2020, the United States Securities and Exchange Commission (SEC) filed a civil suit in federal court in Miami, Florida against TCA Fund Management Group and TCA Global Credit Fund.

The SEC complaint seeks to prevent TCA Fund Management Group and the Global Credit Fund from committing ongoing securities law violations and also sought the appointment of a receiver. The SEC alleges that for many years, the TCA Global Credit Fund, through its affiliate TCA Fund Management, intentionally inflated the net-asset-value – or price – of the fund hiding massive losses from investors. The SEC alleges that TCA inflated these values in two ways.  First, the fund recognized revenues that it never actually received. It would essentially book a gain on loan fees prior to actually receiving them and if the loans never closed, TCA would not adjust their books to reflect reality. The second way TCA artificially inflated its books, according to the SEC, was to book investment banking fees it never actually earned, and actually knew in many instances that it would never earn. Basically, the way this scam worked, according to the SEC, is TCA would enter into a contract with a company to perform investment banking services for, let’s say, $100,000.  Instead of waiting to actually perform the services and receive the $100,000 payment, TCA would book the $100,000 as received on their books at the time the contract was executed. The result of these practices was to provide investors with inflated values of these funds. The SEC alleges that these practices violations Section 17(a) of the Securities Act of 1933, 15 U.S.C. Section 77q(a), and Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. Section 78j(b), and Exchange Act Rule 10b-5, 17 C.F.R. Section 240.10b-5; and violations of Sections 206(1), (2), and (4), along with Section 2076 of the Investment Advisers Act of 1940, 15 U.S.C. Sections 80b-6(1), 80b-6(2), 80b6(4), and 80b-7, and Advisers Act Rules 206(4)-7 and 206(4)-8, 17 C.F.R. Sections 275.206(4)-7, 275.206(4)-8.

According to documents field with the SEC for TCA funds, called a Form D, TCA Fund Management Group used numerous FINRA-Registered broker/dealers to sell  investments in the TCA Global Credit Fund for many years including:

AdobeStock_200379710-300x200Stoltmann Law Offices is investigating Kimberly Kitts, a former Royal Alliance broker who was terminated from the firm concerning allegations that she misappropriated client funds. Royal Alliance stated that it received notice from one of her clients who said that Kitts had converted or misappropriated funds. Kitts also may have engaged in outside business activities including those with Marquis Consulting, which is an investment related activity involved in business valuation, and she disclosed involvement as a trustee for an estate and also a volunteer for a non-profit company called Center for Coastal Studies. These allegations concerning conversion and engaging in outside business activities and private securities transactions, are often accompanied by claims of “selling away” within the industry. This is when a broker recommends or sells a security that is not held or offered by her member firm. She does this in order to not have to share the commissions with her firm. Selling away is against securities laws and internal firm rules.
When advisors convert or misappropriate funds they often create businesses to serve as a cover for the theft. Federal securities laws and laws within the Financial Industry Regulatory Authority (FINRA) state that firms must monitor and supervise their employees in order to detect and prevent their brokers from offering investments in this way. “Selling away” occurs when brokerage firms either fail to put in place a reasonable supervisory system to oversee their brokers, or fail to actually implement that system. This can result in unsupervised misconduct and with advisors violating rules. The brokerage firm may be liable for investment losses if it allows its’ employees to transgress. The firm may be sued on a contingency fee basis to recover losses.
Kimberly Kitts, according to public records with FINRA, was previously registered with ING Financial Partners in Des Moines, Iowa from January 2003 until April 2004, and Royal Alliance Associates in Palmer, Massachusetts from April 2004 until November 2017. She has four customer disputes against her, and one regulatory matter. She has been permanently barred from the industry.

Stoltmann Law Offices continues to investigate Dawn Bennett. According to a recent Disciplinary Proceeding against her, Bennett failed to provide information and documentation requested by the Financial Industry Regulatory Authority (FINRA) in an investigation involving potentially serious violations, such as conversion, fraud and private securities transactions. On July 11, 2016, Bennett was barred from the securities industry for violating federal securities rules by, among other things, making material misrepresentations and omissions regarding her assets under management. She was also ordered to cease and desist from any further violations of federal securities rules and ordered to pay disgorgement of $556,102 and ordered to pay a civil penalty of $600,000.

According to a FINRA investigation, in 2015, Bennett allegedly solicited and sold approximately $6 million in DJB11 convertible notes, and/or promissory notes purportedly guaranteed by her company, to 30 investors, most of whom were elderly. Bennett may have misappropriated investors’ money, committed fraud, and engaged in undisclosed outside business activities and private securities transactions. These are all against securities rules and regulations.

According to her FINRA BrokerCheck report, Bennett was registered with Wheat, First Securities in Charlotte, North Carolina from March 1987 until August 1996, Legg Mason Wood Walker in Baltimore, Maryland from August 1996 until February 2006, Citigroup Global Markets in New York, New York from February 2006 until February 2006, Royal Alliance Associates in Washington, D.C. from February 2006 until October 2009 and Western International Securities in Washington, D.C. from October 2009 until December 2015. She has 12 customer disputes against her, seven of which are currently pending. She is not currently licensed within the industry.

Stoltmann Law Offices is investigating Darrin Farrow, a former registered representative with Royal Alliance Associates. He was recently terminated from the firm. Allegedly, Royal Alliance found out that Farrow was involved in an outside business activity. This is against securities rules and regulations. He also participated in two separate undisclosed outside business activities. The Financial Industry Regulatory Authority (FINRA) found that Farrow founded an unincorporated entity that provides consulting services to the cannabis industry and also cultivates, produces and manufactures cannabis and formed a Delaware limited-liability company that grows cannabis and supplies it to dispensaries throughout Oregon. This involved the sale of more than $1 million of membership interests. This is called “selling away” and is when a broker sells a security that is not offered or sold by his member firm. This can generate large commissions for the broker and can cause fees for the client.

Farrow was registered with The Equitable Life Assurance Society, Equico Securities, Vestax Securities Corp, LPL, Watersone Financial Group, Triad Advisors, Royal Alliance in Rocky River, Ohio from February 2010 until June 2015 and Triad Advisors in Rocky River. He has one customer dispute against him. He is not licensed within the industry. Please call us today if you invested with Darrin Farrow. We may be able to help you bring a claim against his former firm, Royal Alliance, for not properly supervising him and allowing him to sell away from the firm.

Stoltmann Law Offices is investigating Kevin Dunnigan, a broker with Investment Centers of America. Dunnigan has been accused of making unsuitable investment recommendations, misrepresenting material facts related to a mutual fund investments, failed to disclose risks and commissions, acted negligently, omitted material facts and was censured and fined for his actions. These are all against securities rules and regulations. Mr. Dunnigan was registered with Integrated Resources Equity Corp from May 1984 until November 1989 and Royal Alliance Associates in New York, New York from November 1989 until December 1990. He is currently registered with Investment Centers of America in Loveland, Colorado and has been since December 1986. He has six customer disputes against him. Please call our securities law firm for a free consultation with an attorney if you lost money with Kevin Dunnigan. There is no obligation and we may be able to help you bring a claim against his firm, Investment Centers of America.

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