Jump to Navigation

Fort Lauderdale Securities Law Blog

Russell L. Forkey

Frederic Elm and Elm Tree Investment Advisors - Boca Raton, Florida Securities and Investment Fund Fraud and Misrepresentation Attorney

Boca Raton, Florida Securities and Investment Fund Fraud and Misrepresentation Litigation and Arbitration Attorney:

Securities and Exchange Commission v. Frederic Elm f/k/a Frederic Elmaleh, et al., Case No. 15-cv-60082-DIMITROULEAS/SNOW

SEC Charges Investment Adviser and Manager in South Florida-Based Fraud

The Securities and Exchange Commission recently announced fraud charges and an asset freeze against a Fort Lauderdale, Florida-based investment adviser, its manager, and three related funds with defrauding investors in a scheme that raised more than $17 million since November 2013.

The SEC's complaint, filed in federal court in the Southern District of Florida on January 15, 2015, charged Elm Tree Investment Advisors LLC, its founder and manager, Frederic Elm, and three funds, Elm Tree Investment Fund LP, Elm Tree "e"Conomy Fund LP, and Elm Tree Motion Opportunity LP.  According to the complaint, Elm, formerly known as Frederic Elmaleh, his unregistered investment advisory firm, and three funds misled investors and used most of the money raised to make Ponzi-like payments to the investors.  The complaint also alleges that Elm treated the funds as his personal piggy bank, tapping them to buy a $1.75 million home, luxury automobiles, jewelry, and cover daily living expenses. Elm's wife, Amanda Elm, formerly Elmaleh, is named as a relief defendant based on her receipt of investor monies.

The SEC's complaint charges Elm, his advisory firm and the Elm Tree funds with violating Section 17(a) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint also charges Elm and ETIA with violations of Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8.  The SEC is seeking relief for investors, including return of allegedly ill-gotten gains, with interest, and financial penalties.

The Honorable William Dimitrouleas on January 16 granted the SEC's request for a temporary restraining order and temporary asset freeze against Elm, his firm, and the three Elm Tree funds. The judge ordered a temporary asset freeze against Amanda Elm and required her and the other defendants to provide accountings. Judge Dimitrouleas also entered an order appointing Grisel Alonso as receiver for Elm Tree Investment Advisors and the Elm Tree funds. A court hearing has been scheduled for January 29.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Shawn Peter Bishop - Stockbroker and Account Executive Theft Fort Lauderdale, Florida FINRA Arbitration Attorney

Shawn Peter Bishop - Stockbroker and Account Executive Theft Fort Lauderdale, Florida FINRA Arbitration Attorney:

The Financial Industry Regulatory Authority, Inc. (FINRA) is a self-regulatory authority assigned the responsibility, by the Securities and Exchange Commission, to license, regulate and discipline securities broker/dealers and their employees, including account executives. In the event that FINRA elects to institute an enforcement action, firms and licensed individuals have the responsibility to reflect such action on their U-4 and/or U-5 filings, which can be viewed on the FINRA website under the broker-check section of the site or by viewing the monthly disciplinary information also provided on the FINRA site.

The monthly disciplinary information is referenced on the FINRA site generally in alphabetical order. This post relates to the following company or individuals. If the reader would like to review the entire FINRA release or the broker-check information concerning this matter, you can follow these highlighted links:

December 2014 Disciplinary and Other FINRA Actions:

http://www.finra.org/web/groups/industry/@ip/@enf/@da/documents/disciplinaryactions/p602080.pdf

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

Shawn Peter Bishop (CRD #6262968, Crown Point, Indiana) submitted an AWC in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Bishop consented to the sanction and to the entry of findings that he converted funds totaling $2,000 from his teller drawer at his member firm's affiliate bank and used the funds for his personal benefit. The findings stated that Bishop returned some of the funds to his teller drawer without the bank's detection. Bishop did not have permission or authority from the bank to use the teller drawer funds for his personal benefit. (FINRA Case #2014042331701)

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Ricky Eugene Bell - Boca Raton, Florida Unapproved Private Security and Unauthorized Loan Transaction FINRA Arbitration Attorney

Ricky Eugene Bell - Boca Raton, Florida Unapproved Private Security and Unauthorized Loan Transaction FINRA Arbitration Attorney:

The Financial Industry Regulatory Authority, Inc. (FINRA) is a self-regulatory authority assigned the responsibility, by the Securities and Exchange Commission, to license, regulate and discipline securities broker/dealers and their employees, including account executives. In the event that FINRA elects to institute an enforcement action, firms and licensed individuals have the responsibility to reflect such action on their U-4 and/or U-5 filings, which can be viewed on the FINRA website under the broker-check section of the site or by viewing the monthly disciplinary information also provided on the FINRA site.

The monthly disciplinary information is referenced on the FINRA site generally in alphabetical order. This post relates to the following company or individuals. If the reader would like to review the entire FINRA release or the broker-check information concerning this matter, you can follow these highlighted links:

December 2014 Disciplinary and Other FINRA Actions:

http://www.finra.org/web/groups/industry/@ip/@enf/@da/documents/disciplinaryactions/p602080.pdf

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

Ricky Eugene Bell (CRD #2065556, Fayetteville, North Carolina) was barred from association with any FINRA member in any capacity and ordered to pay a total of $19,650, plus interest, in restitution to customers. The sanctions were based on findings that Bell engaged in private securities transactions through a lending program without providing notice to, or receiving approval from, his member firm. The findings stated that Bell solicited and received personal loans totaling $19,650 from customers without requesting or receiving his firm's approval to solicit or receive the loans. The firm notified Bell of its policies and procedures against borrowing from customers. The findings also stated that Bell failed to respond to FINRA requests for information and documents and to provide on-the-record testimony. (FINRA Case #2013039439301).

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Matthew King Absher - Boca Raton, Florida Unapproved Outside Business Activity FINRA Arbitration Attorney

Matthew King Absher - Boca Raton, Florida Unapproved Outside Business Activity FINRA Arbitration Attorney:

The Financial Industry Regulatory Authority, Inc. (FINRA) is a self-regulatory authority assigned the responsibility, by the Securities and Exchange Commission, to license, regulate and discipline securities broker/dealers and their employees, including account executives. In the event that FINRA elects to institute an enforcement action, firms and licensed individuals have the responsibility to reflect such action on their U-4 and/or U-5 filings, which can be viewed on the FINRA website under the broker-check section of the site or by viewing the monthly disciplinary information also provided on the FINRA site.

The monthly disciplinary information is referenced on the FINRA site generally in alphabetical order. This post relates to the following company or individuals. If the reader would like to review the entire FINRA release or the broker-check information concerning this matter, you can follow these highlighted links:

December 2014 Disciplinary and Other FINRA Actions:

http://www.finra.org/web/groups/industry/@ip/@enf/@da/documents/disciplinaryactions/p602080.pdf

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

Matthew King Absher (CRD #5668975, Austin, Texas) submitted an AWC in which he was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in any capacity for 60 days. Without admitting or denying the findings, Absher consented to the sanctions and to the entry of findings that he engaged in an outside business activity by serving as a director of an inactive, but registered company he incorporated for daytrading without providing written notice to his member firm. The findings stated that Absher inaccurately answered firm questionnaires about that outside business activity.

Additionally, Absher engaged in an outside business activity by serving as president of a company that provided containers for construction sites without providing written notice to his firm. (FINRA Case #2013038446701).

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Boca Raton and South Florida Oil and Gas Investment Fraud and Misrepresentation Litigation Attorney

Boca Raton and South Florida Oil and Gas Investment Fraud and Misrepresentation Litigation and Arbitration Attorney

Oil and Gas Investment Programs:

Most oil and gas investment opportunities, while involving varying degrees of risks to the investor, are legitimate in their marketing and responsible in their operations. However, as in many other investment opportunities, it is not unusual for unscrupulous promoters to attempt to take advantage of investors by engaging in fraudulent practices.

Types of Oil and Gas Investment Programs:

Oil and gas investments take many forms, including limited partnership interests, ownership of fractional undivided interests in leases, and general partnerships. Tax consequences and investor liability vary according to the type of program. True general partnerships in which investors actively participate in the operations of the venture are not securities. A general partner, however, is personally liable for partnership debts.

In a drilling limited partnership, an oil or gas company sells partnership units to investors and uses the money it raises to lease property and drill wells. In return for managing the project, the sponsor company usually takes an upfront fee that averages about 15-16% of one's investment (commonly referred to as tangible and intangible drilling costs) and also shares in a percentage of any revenue generated. In return, the promoter offers the investor the prospect of a substantial first year tax write-off and quarterly cash distributions from the sale of any oil and gas the partnership finds until the wells run dry.

Drilling partnerships have always been a gamble, but recently, they have proven somewhat riskier than usual. This type of investment is very speculative, is a highly illiquid investment and can have a long holding period.

Other types of oil and gas investments vehicles include:

• Working & Producing Interests

• Combination of Working Interests and Drilling

• Rework Programs, which may be combined with other programs

• Royalty Programs

• Notes or Other structures whose underlying assets are oil & gas

Working Interest programs with producing wells are chosen by investors who desire cash flow immediately. Obviously, the tax benefits from the drilling are not present, but the immediate cash flows can be and the depletion allowance is.

Rework Offerings are sometimes found as a program by themselves or in combination with working interests or drilling. Reworking the wells usually means cleaning, flushing or repairing an existing well to bring better functionality and production, and hence more income.

Royalty programs used to be more common, but the prices to acquire them and to make them work for investor cash flow expectations has become more difficult. There are few pure royalty programs these days.

With each of the above referenced type of offerings, there are numerous risks associated with each. Consequently, it is important that the potential investor have someone with the appropriate degree on knowledge and experience review the investment so that it can be properly explained to the investor and the investor will be in a position to make an intelligent decision.

It always makes sense for the investor to verify as much of the information as the investor or his or hers investment advisor can. By way of example, we recently handled a case where the promotor of the venture actually took the investors to look at "their well" that was going to be reworked. Unfortunately, the well that the investors were shown was not even owned by the promotor. A fact that could have been easily verified.  Of course, the promotor took the investor's money and the investor had to sue to get it back.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Broker - Dealers - Boca Raton, Florida Investment Attorney

Miami, Fort Lauderdale, Boca Raton and West Palm Beach Florida Investment Fraud and Misrepresentation FINRA Arbitration, AAA Arbitration, JAMS Arbitration, State and Federal Court Litigation Attorney, Russell L. Forkey, Esq.

Who may be classified as a "Broker".

Section 3(a)(4)(A) of the Securities and Exchange Act of 1934 (the "Act") generally defines a "broker" broadly as any person engaged in the business of effecting transactions in securities for the account of others.

Sometimes you can easily determine if someone is a broker. For instance, a person who executes transactions for others on a securities exchange clearly is a broker. However, other situations are less clear. For example, each of the following individuals and businesses may need to register as a broker, depending on a number of factors, which are too complicated to discuss herein. A few examples are: "finders," "business brokers," and other individuals or entities that engage in the following activities:

• Finding investors or customers for, making referrals to, or splitting commissions with registered broker-dealers, investment companies (or mutual funds, including hedge funds) or other securities intermediaries;

• Finding investment banking clients for registered broker-dealers;

• Finding investors for "issuers" (entities issuing securities), even in a "consultant" capacity;

• Engaging in, or finding investors for, venture capital or "angel" financings, including private placements;

• Finding buyers and sellers of businesses (i.e., activities relating to mergers and acquisitions where securities are involved);

• Investment advisers and financial consultants;

• Foreign broker-dealers that cannot rely on Rule 15a-6 under the Act (discussed below);

• Persons that operate or control electronic or other platforms to trade securities;

• Persons that market real-estate investment interests, such as tenancy-in-common interests, that are securities;

• Persons that act as "placement agents" for private placements of securities;

• Persons that market or effect transactions in insurance products that are securities, such as variable annuities, or other investment products that are securities;

• Persons that effect securities transactions for the account of others for a fee, even when those other people are friends or family members;

• Persons that provide support services to registered broker-dealers; and

• Persons that act as "independent contractors," but are not "associated persons" of a broker-dealer (for information on "associated persons," see below).

In order to determine whether any of these individuals (or any other person or business) is a broker, one would look at the activities that the person or business actually performs. The facts associated with the activity are important. Many times, it is necessary to hire a qualified professional to assist in making the determination as to whether or not the individual or business is functioning as a broker.

Who may be classified as a "Dealer".

Unlike a broker, who acts as agent, a dealer acts as principal. Section 3(a)(5)(A) of the Act generally defines a "dealer" as: any person engaged in the business of buying and selling securities for his own account, through a broker or otherwise.

The definition of "dealer" does not include a "trader," that is, a person who buys and sells securities for his or her own account, either individually or in a fiduciary capacity, but not as part of a regular business. Individuals who buy and sell securities for themselves generally are considered traders and not dealers.

Sometimes you can easily tell if someone is a dealer. For example, a firm that advertises publicly that it makes a market in securities is obviously a dealer. Other situations can be less clear. For instance, each of the following individuals and businesses may need to register as a dealer, depending on a number of factors:

• a person who holds himself out as being willing to buy and sell a particular security on a continuous basis;

• a person who runs a matched book of repurchase agreements; or

• a person who issues or originates securities that he also buys and sells.

Broker/dealers, who operate in their capacities as such, are subject to a substantial number of federal and state statutes, rules and regulations designed to protect members of the investing public. If you have lost money as a result of your association with a broker/dealer, you should contact a qualified professional to review your particular situation.

Please keep in mind that the above information is being provided for educational purposes only. It is not designed to be complete in all material respects and that any statutes, rules or regulations referenced may be modified, from time to time. Thus, it should not be relied upon as legal or investment advice.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including West Palm Beach, Fort Lauderdale, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Efstratios D. Argyropoulos and Prima Capital Group, Inc. - Boca Raton, Florida Stock Promoter Fraud and Misrepresentation Attorney

Efstratios D. Argyropoulos and Prima Capital Group, Inc. - Boca Raton, Florida Stock Promoter Fraud and Misrepresentation Attorney

Securities and Exchange Commission v. Efstratios "Elias" D. Argyropoulos and Prima Capital Group, Inc., Civil Action No. 2:14-cv-09800 (C.D. Cal.)

SEC Charges Stock Promoter with Fraudulent Scheme Related to Pre-IPO Facebook and Twitter Shares

On December 23, 2014, the Securities and Exchange Commission charged a stock promoter based in Santa Barbara, Calif., with fraudulently raising nearly $3.5 million from investors purportedly to purchase Facebook and Twitter shares prior to their initial public offerings (IPOs).

The SEC alleges that instead of purchasing the shares in the secondary market as promised, Efstratios "Elias" Argyropoulos and his firm Prima Capital Group misappropriated investor funds. They used the money primarily for day trading of stocks and options as well as to pay off certain investors who complained when they didn't receive the promised Facebook or Twitter shares.

Argyropoulos and Prima Capital agreed to settle the SEC's charges and to be barred from working for an investment adviser or broker-dealer, and financial penalties will be determined at a later date.

The SEC's complaint alleges that Argyropoulos and Prima violated Section 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and, against Argyropoulos only, civil money penalties.

Without admitting or denying the allegations in the SEC's complaint, Argyropoulos and Prima consented to a judgment permanently enjoining them from violations of Section 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder, ordering them to pay, jointly and severally, disgorgement with prejudgment interest, and ordering Argyropoulos to pay civil money penalties. There will be further proceedings before the District Court to determine the amounts of disgorgement with prejudgment interest and civil money penalties. The bifurcated settlement remains subject to court approval. Argyropoulos also consented, without admitting or denying the SEC's findings, to an administrative proceeding order barring him from, among other things, association with any broker, dealer or investment adviser. The administrative proceeding will be instituted following court approval of the bifurcated settlement.

Also on December 23, 2014, SEC separately announced an administrative proceeding against Khaled A. Eldaher, a registered representative living in Austin, Texas. The SEC Enforcement Division alleges that while working for a registered broker-dealer, Eldaher reached a side agreement with Argyropoulos to solicit investors and receive 50 percent of the mark-up on Facebook shares he sold. Eldaher sold $362,887.50 worth of Facebook shares and was paid $15,478 by Prima Capital. He was later terminated by the broker-dealer for selling securities other than through the firm. The Enforcement Division alleges that Eldaher's sales of unregistered securities violated Section 15(a)(1) of the Exchange Act. The matter will be scheduled for a public hearing before an administrative law judge for proceedings to adjudicate the Enforcement Division's allegations and determine what, if any, remedial actions are appropriate.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Private Placement - Private Offering - Boca Raton, Florida Investment Fraud and Misrepresentation Attorney

Private Placement - Private Offering - Boca Raton, Florida Investment Fraud and Misrepresentation Attorney:

What is a private placement?

A securities offering exempt from registration with the Securities and Exchange Commission (the "SEC") is sometimes referred to as a private placement. Under the federal securities laws, a company or private fund may not offer or sell securities unless the offering has been registered with the SEC or an exemption from registration is available. Private and public companies engage in private placements to raise funds from investors. Private funds, such as hedge funds, also raise investment capital through private placements.

Private placements are not subject to some of the laws and regulations that are designed to protect investors, such as disclosure requirements that apply to registered offerings. One of the exemptions that is available is called a Rule 506(c) offering. Such an offering must comply with a number of requirements such as only accredited investors may invest in a Rule 506(c) offering. This limitation exists because these offerings do not have the same investor protections as, and have unique risks when compared to, offerings that are registered with the SEC.

An accredited investor, in the context of an individual investor, is a person who: had income in excess of $200,000 (or $300,000 with a spouse) in each of the prior two years, and reasonably expects the same for the current year, or has a net worth over $1 million, either alone or with a spouse (excluding the value of the person's primary residence or any loans secured by the residence (up to the value of the residence).

How will the company or private fund know whether you are an accredited investor?

In a rule 506(c) offering, the company or private fund is required to take reasonable steps to verify your accredited investor status, which could include reviewing documentation, such as W-2s, tax returns, bank and brokerage statements, credit reports and the like.

Depending on the circumstances, the company or private fund may rely on a written confirmation from a third party to verify your accredited investor status. The SEC does not require any specific verification method or process for companies or private funds for these offerings.

If the company or private fund accepts a written confirmation from a third party to verify whether you are an accredited investor, the third party may be a registered broker/dealer, SEC registered investment adviser, licensed attorney or certified public accountant. The third party could be engaged by the company or private fund, or could be retained by the investor (e.g., your personal broker-dealer, investment adviser, attorney or certified public accountant).

You do not have to provide any information if you do not feel comfortable doing so. If you do not provide all of the requested information, you should not be able to invest in the particular offering if the company or private fund is unable to verify that you are an accredited investor.

If the company or private fund offering the securities does not take steps to verify your accredited investor status or allows you to participate in the offering even though you do not meet the income or net worth criteria discussed above, this may be a warning sign that the company or private fund is not complying with the federal securities laws and is something to consider before investing in the offering.

What should you consider when investing in private placements?

Investing in securities, including through private placements, involves risk. You can lose your entire investment. You will not be able to sell the securities you invest in as easily as you would a publicly traded stock. You may have to hold your investment indefinitely. You will likely be provided with less information about your investment than would be required to be disclosed to you if the securities were sold to you in an offering registered with the SEC. Companies and private funds engaging in private placements have more discretion in what information to disclose to you. If the company or private fund does not regularly file reports with the SEC, there will likely be less information available about your investment on an ongoing basis.

You should read and understand all the information that is provided to you regarding the investment, including any offering memorandum or private placement memorandum that describes the investment. Pay particular attention to any risk factors that are described to you. In addition, you should carefully consider the terms of any subscription agreement or other agreements you have to enter into for the investment.

Companies and private funds engaging in a private placement generally must file a notice of sales with the SEC for each new offering by making a notice filing on what is called a Form D. These filings are required no later than 15 calendar days after the first sale of securities in the offering and contain some basic information about the company or private fund and the securities offering. Forms D are publicly available through the SEC's Edgar website.

Are You an Accredited Investor - Private Investment Boca Raton, Florida Fraud, Misrepresentation and Mismanagement Litigation Attorney

Are You an Accredited Investor - Private Investment and Private Placement Boca Raton, Florida Fraud, Misrepresentation and Mismanagement Litigation Attorney:

Accredited Investors:

Under the Securities Act of 1933, a company that offers or sells its securities must register the securities with the SEC or find an exemption from the registration requirements. The Act provides companies with a number of exemptions. For some of the exemptions, such as rules 505 and 506 of Regulation D, a company may sell its securities to what are known as "accredited investors." The term accredited investor is defined in Rule 501 of Regulation D.

What does it mean to be an accredited investor?

Under the federal securities laws, a company or private fund may not offer or sell securities unless the transaction has been registered with the SEC or an exemption from registration is available. Certain securities offerings that are exempt from registration may only be offered to, or purchased by, persons who are accredited investors. One principal purpose of the accredited investor concept is to identify persons who can bear the economic risk of investing in these unregistered securities. Unlike offerings registered with the SEC in which certain information is required to be disclosed, companies and private funds, such as a hedge fund or venture capital fund, engaging in these exempt offerings do not have to make prescribed disclosures to accredited investors. These offerings, sometimes referred to as private placements, involve unique risks and you should be aware that you could lose your entire investment. Recently, the SEC recently adopted rules to permit general advertising for certain exempt offerings.

Are you an accredited investor?

An accredited investor, in the context of a natural person, includes anyone who: earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person's primary residence).

On the income test, the person must satisfy the thresholds for the three years consistently either alone or with a spouse, and cannot, for example, satisfy one year based on individual income and the next two years based on joint income with a spouse. The only exception is if a person is married within this period, in which case the person may satisfy the threshold on the basis of joint income for the years during which the person was married and on the basis of individual income for the other years.

In addition, entities such as banks, partnerships, corporations, nonprofits and trusts may be accredited investors. Of the entities that would be considered accredited investors and depending on your circumstances, the following may be relevant to you in any trust, with total assets in excess of $5 million, not formed to specifically purchase the subject securities, whose purchase is directed by a sophisticated person, or any entity in which all of the equity owners are accredited investors.

In this context, a sophisticated person means the person must have, or the company or private fund offering the securities reasonably believes that this person has, sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment.

How do you calculate your net worth?

To qualify as an accredited investor under the net worth test, you must have a net worth that exceeds $1 million, either alone or with a spouse. If calculating joint net worth with a spouse, it is not necessary that property be held jointly. Calculating net worth involves adding up all your

assets and subtracting all your liabilities. The resulting sum is your net worth. The value of your primary residence is not included in your net worth calculation. In addition, any mortgage or other loan on the residence does not count as a liability up to the fair market value of the residence. If the loan is for more than the fair market value of the residence (i.e., if your mortgage is underwater), then the loan amount that is over the fair market value counts as a liability under the net worth test. Further, any increase in the loan amount in the 60 days prior to your purchase of the securities (even if the loan amount does not exceed the value of the residence) will count as a liability as well. The reason for this is to prevent net worth from being artificially inflated through converting home equity into cash or other assets.

The rules defining accredited investor were changed with the passage of the Dodd-Frank Act to exclude a primary residence from the net worth test This means that some investors who were accredited investors prior to July 20, 2010 are now not accredited investors. For these investors, any purchase rights, such as preemptive rights or rights of first offer, related to securities that they invested in as accredited investors prior to July 20, 2010 are grandfathered in, provided that certain conditions are met. This means that the investor can still exercise these rights even though the investor may not meet the current definition of accredited investor.

 

Oil and Gas Offering Fraud - Fraudulent Stock Manipulation - False and Misleading Press Releases

Boca Raton, Florida - Oil and Gas Offering Fraud - Fraudulent Stock Manipulation - False and Misleading Press Releases

SEC Charges New Orleans Oil-And-Gas Company with Fraudulent Stock Manipulation

Securities and Exchange Commission v. Treaty Energy Corporation, et al., Civil Action No. 4:14-cv-00812 (E.D. Tex., filed December 15, 2014)

The Securities and Exchange Commission recently charged a New Orleans-based oil-and-gas company and five executives with running a stock trading scheme in which they claimed to have struck oil in Belize in order to manipulate the price of the company's stock as they illegally sold restricted shares to the public.

The SEC also charged a Houston-based attorney with facilitating the scheme by issuing false legal opinion letters that allowed free trading of the restricted company stock.

According to the SEC's complaint filed in U.S. District Court for the Eastern District of Texas, Treaty Energy Corporation issued deceptive press releases touting drilling successes in Belize and Texas to induce investor demand for its unregistered stock, which was then illegally distributed to the public. The SEC alleges that Treaty Energy's founder Ronald Blackburn and four company officers - Andrew V. Reid, Bruce A. Gwyn, Lee C. Schlesinger, and Michael A. Mulshine - obtained at least $3.5 million in illicit profits from the scheme.

The SEC's complaint further alleges that Treaty Energy's outside counsel Samuel Whitley abused his gatekeeper role and enabled the scheme by authoring improper legal opinion letters that allowed the company and its officers to illegally distribute unregistered stock to the public. Whitley was aware that Blackburn was running the company and Treaty Energy was abusing registration rules under the federal securities laws. Yet these facts did not deter him from issuing the opinion letters that allowed the scheme to proceed.

According to the SEC's complaint, the scheme had three basic components. The first part began in January 2012 when Blackburn directed Treaty Energy to issue a press release claiming that its purported oil strike in Belize contained an estimated five to six million barrels of recoverable oil. Treaty's stock price shot up nearly 80 percent that day. However, the Belize government publicly refuted Treaty Energy's purported oil strike the very next day, calling the company's statement "false and misleading" and "irresponsible." The SEC alleges that despite Belize's denial, Blackburn and the company's officers continued to mislead investors by claiming that Belize was merely downplaying an actual oil strike for strategic reasons.

The SEC alleges that the second part of the scheme entailed Treaty Energy's failure to disclose in public filings from 2009 to 2013 that Blackburn - previously convicted of federal income tax evasion - actually controlled the company and was a de facto officer. The SEC alleges that Reid, Gwyn, Schlesinger, and Mulshine all knew Blackburn's true role at the company, but intentionally kept this fact out of its disclosures to conceal from the public that a convicted felon was in charge.

According to the SEC's complaint, the final part of the scheme got underway in November 2013 when Treaty Energy began offering investors working interests in a well in West Texas. Investors were enticed with claims that the working interests were low-risk and expected to yield a return of 111.42 percent over a 10-year period. The SEC alleges that Treaty Energy and its officers knew these claims were baseless because the well was producing only marginal amounts of oil. In fact, the well produced 235 total barrels from October 2013 to October 2014.

The SEC's complaint charges Treaty Energy, Blackburn, Reid, Gwyn, Mulshine, and Schlesinger with securities fraud as well as violations of the registration and reporting violations of the federal securities laws. The SEC seeks disgorgement of ill-gotten gains with prejudgment interest plus financial penalties as well as penny stock bars, officer-and-director bars, and permanent injunctions against them. Reid and Gwyn are additionally charged with signing false certifications in Treaty Energy's SEC filings, and Whitley is accused of securities registration violations.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Contact Us Today

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Russell L. Forkey, P.A.

1075 Broken Sound Parkway NW, Suite 103

Boca Raton, FL 33487

Directions

Local: 954-514-9605, 561-406-4644

Toll Free: 888-671-0962

Fax: 561-406-4633

Contact Us

Privacy Policy | Law Firm Marketing by FindLaw, a Thomson Reuters business.