professional athletes scam

Retired NFL Players are Victims in Alleged Financial Fraud by Cambridge

Sep 2, 2019

The Securities and Exchange Commission (“SEC”) recently charged a Florida-based investment adviser firm and its principals with defrauding investors who have mostly retired NFL players who were part of a class-action suit against the NFL relating to concussion-related brain injuries. The SEC complaint charges Cambridge Capital Group Advisors, LLC (f/k/a Cambridge Capital Advisors, LLC), its president Phillip Timothy Howard, who was a Florida attorney representing the retired players in the class action lawsuit, and Don Warner Reinhard, a former registered investment adviser previously barred by the SEC. Howard and Reinhard allegedly raised $4 million from the retired NFL players, about half of whom rolled over their NFL 401(k) accounts into hedge funds run by the defendants. According to the SEC complaint, the defendants defrauded 20 investors in two proprietary hedge funds operating out of Howard’s law offices by representing that the hedge funds would invest in a variety of instruments. However, unbeknownst to investors, the funds were almost exclusively invested in settlement advance loans to more than 70 of Howard’s NFL class-action clients. The SEC alleges that the defendants promoted Reinhard as an “extremely successful investment manager,” while concealing that he served jail time for bankruptcy and tax fraud, and had been barred by the SEC from working for any investment adviser firm. Additionally, the complaint alleges that Howard borrowed $612,000 in undisclosed personal mortgage loans from the funds, which he never repaid and that Howard and Reinhard used investor funds to pay themselves fabricated “broker fees” on settlement advance loans to Howard’s legal clients. Most egregiously, the victims of this alleged fraud allegedly sought the advice of Howard, their attorney, as concussion victims and were particularly vulnerable. Many rolled over their retirement money to make their investments into the funds. Professional athletes are often the victims of financial scams. If you or someone you know has been the subject of a financial fraud any other type of investment fraud, we may be able to help. Call us today for a free consultation. Former Wall Street Attorney Melanie S. Cherdack represents investors in the United States and the Caribbean in claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-768-2499 or complete our contact form for a free consultation.

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Boca Raton Based Summit Brokerage Services Fined For Broker’s Excessive Trading

Jul 5, 2019

Boca Raton Based Summit Brokerage Services Fined For Broker’s Excessive TradingFINRA announced this week that it fined Summit Brokerage Services, Inc. approximately $880,000 for supervisory failures, including about $558,000 in restitution to customers whose accounts were excessively traded by a former broker of the firm barred by FINRA. FINRA Press Release FINRA found that between January 2012 through March 2017, Summit, which had over 700 brokers, failed to review certain automated trade alerts used to identify excessive trading. One representative identified as “CJ,” was singled out by FINRA for excessively trading securities in the accounts of 14 customers. Most egregiously, FINRA found that CJ placed 533 trades for a retiree over a three-year period, causing her to pay more than $171,000 in commissions. FINRA also fined Summit for inadequate supervision of its brokers. Although CJ’s trading for 14 customers generated more than 150 alerts for potentially excessive trading,  FINRA found that Summit did not review them. Summit agreed to pay restitution to affected customers in the amount of the commissions they were charged as a result of the excessive trading in their accounts. FINRA previously barred CJ in a separate disciplinary action. In the  FINRA AWC FINRA found that from June 2015 through March 2018, Summit failed to reasonably supervise its representatives’ use of “consolidated reports,” documents provided to customers summarizing the customer’s financial holdings, including assets held away from the firm. FINRA found that one such report sent by a registered representative of the firm to a customer materially misstated the value of the customer’s investment. FINRA Rule 2111 and its predecessor, NASD Rule 2310, require brokerage firms and their brokers to have a reasonable basis to believe that a recommended securities transaction is suitable in light of the customer’s investment profile. Recommended securities transactions may be unsuitable if, when taken together, they are excessive, the level of trading is inconsistent with the customer’s investment profile, and the registered representative exercises control over the customer’s account. No single test defines when trading is excessive, but factors such as the turnover rate and the cost-to-equity ratio are considered in determining whether a member firm or associated person has violated FINRA’s suitability rule. If you believe your brokerage account has been excessively traded or that unsuitable investments have been sold to you or a loved one, you may have a claim for damages. Please call us at 888-768-2499 or complete our contact form for a free consultation. Former Wall Street Attorney Melanie S. Cherdack represents investors in the United States and the Caribbean in claims against brokers and brokerage firms for wrongdoing.

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ponzi scheme

SEC Charges Ponzi Scheme Run out of Frat House

Jun 10, 2019

Former College Student Charged with Running Ponzi Scheme out of Frat House On June 3, 2019, the Securities and Exchange Commission announced an emergency action charging a recent college graduate with orchestrating a Ponzi scheme that targeted college students and their families. The SEC’s complaint https://www.sec.gov/litigation/complaints/2019/comp-pr2019-84.pdf alleges that Syed Arham Arbab, 22, ran his scheme out of a fraternity house near the University of Georgia campus. According to the SEC’s complaint, Arbab allegedly offered hedge fund investments in “Artis Proficio Capital,” which he claimed had generated past annual returns of as much as 56% and for which the investments were guaranteed up to $15,000 in principal. Arbab also allegedly sold guaranteed “bond agreements” with a fixed rate of return. The SEC alleges that at least eight college students, recent graduates, or their family members invested more than $269,000 in these investments. The SEC’s complaint charges Arbab, Artis Proficio Capital Investments LLC, and Artis Proficio Capital Management LLC, with violating the antifraud provisions of the federal securities laws. According to the SEC’s complaint, there was no hedge fund at all, and Arbab created fake performance returns which he used to sell the fund to investors. Instead of investing the money in the hedge fund, Arbab allegedly invested the funds in his personal bank and brokerage accounts, which he used for his own benefit for shopping, entertainment, and travel to Las Vegas. As is the case with most Ponzi schemes, Arbab also allegedly used portions of new investor money to pay earlier investors who had asked for their money back. The SEC alleges that Arbab even instructed some new investors to send their money – unknowingly – to earlier investors through payment apps such as Venmo, Zelle, and Cash App, by representing that these payees were either a “partner” or “manager” in the fund. According to Richard R. Best of the Atlanta office of the SEC “[w]e allege that Mr. Arbab used his college affiliations to operate a Ponzi scheme that drained valuable resources from current and former students. This is a reminder that investors of all ages and experience levels—whether long-time investors or recent graduates investing funds from their first few paychecks—should carefully research investment opportunities and the people offering them.” Investors of all ages can fall victim to a Ponzi scheme, especially in situations where they know the perpetrator through a club or other social group, such as the fraternity in this case. If you or someone you know is a victim of a Ponzi scheme or other investment scam, call us today for a free consultation. Former Wall Street Attorney Melanie S. Cherdack represents investors in the United States and the Caribbean in claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-768-2499 or complete our contact form for a free consultation.

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