• September 1, 2017

    Connecticut financial advisor defrauds elderly investors

    Investors who scrimped and saved for retirement can lose it all to financial advisors who hold themselves out as trustworthy advisors acting in the investor’s interest. In one recent case, the Securities and Exchange Commission charged Connecticut-based broker representative and investment adviser Leon Vaccarelli and his company with fraudulently persuading several elderly customers to invest with him and then spending their money on his own living and business expenses. The SEC’s complaint alleges that instead of investing the customers’ money, Vaccarelli deposited customer funds into his personal and business bank accounts. He allegedly commingled the funds with his own money and used them for his own purposes, and in some instances he used customer funds to pay returns to earlier investors. According to the SEC’s complaint, Vaccarelli asked one customer to sign an agreement that she would not provide certain information to FINRA or the SEC. Customers are alleged to have lost more than one million dollars. While the SEC, FINRA (formerly NASD), and state securities regulators bring enforcement actions to shut down frauds, their focus is not recovering losses for investors. If you want to recover investment losses, you should hire a lawyer. Even if there is a class action pending, you should consult with a lawyer to determine whether you could get a better recovery by opting out of the class and pursuing your losses in your own case. https://www.sec.gov/litigation/litreleases/2017/lr23927.htm

    Continue reading
  • 7th Circuit Court of Appeals logo
    September 1, 2017

    Misuse of self-directed IRA accounts

    The 7th Circuit Court of Appeals affirmed the criminal conviction of Indiana’s Jaime Lopez for running a fraudulent investment scheme. Lopez was able to do this by having investors transfer retirement funds to a company that administers self-directed individual retirement accounts (“IRAs”). Lopez had investors transfer retirement funds into self-directed IRAs administered by a company called Entrust IRA, later known as Midland IRA. He also had investors execute promissory notes. While Lopez told investors the funds would be invested in various blue chip stocks, he used those funds for his wife’s business, to pay his personal expenses, and to make “interest” payments to earlier investors. http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2017/D08-29/C:16-2269:J:Bauer:aut:T:fnOp:N:2019337:S:0

    Continue reading
  • whistle
    August 30, 2017

    7th Circuit decision limiting False Claims Act liability

    Whistleblower case dismissed as based on public info Earlier this month, the Seventh Circuit Court of Appeals affirmed the dismissal of a former hospital employee’s claims under the U.S. and Illinois False Claims Acts. The 7th Circuit ruled that the whistleblower failed to identify independent knowledge of information that materially added to the publicly-available information. As a result, the court found that the whistleblower was not an original source of the allegations in his complaint and affirmed dismissal of his False Claims Act (“FCA”) and Illinois False Claims Act (“IFCA”) claims. In Bellevue v Universal Health Services of Hartgrove, Case No 15-3473 (Aug. 8, 2017), a whistleblower brought claims against a psychiatric hospital that primarily served children with mental illness. The hospital had submitted false certifications to Medicaid on behalf of patients who were identified as being placed in a patient room when they had been sleeping on rollout beds until patient rooms were available. Neither the federal nor state governments chose to intervene in the case. The court determined that the false certifications, audits, and other documents contained all the critical elements exposing the fraud. These documents were sufficient information for the government to infer that the hospital knew that its Medicaid certifications were false when they were filed. The court differentiated this case from other cases where the publicly disclosed information was not sufficient to show knowledge of falsity. http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2017/D08-08/C:15-3473:J:Bauer:aut:T:fnOp:N:2007443:S:0

    Continue reading
  • prisoner hands holding bars
    August 29, 2017

    Chicago real estate developer sentenced to 3 years in prison

    Real estate developer defrauded business partner and banks Prominent Chicago real estate developer, Laurance Freed, was sentenced to three years in prison for a fraudulent scheme involving the Streets of Woodfield shopping center in Schaumburg, a Chicago suburb, and the redevelopment of the Goldblatt’s department store in the Uptown neighborhood of Chicago. Freed was well-known for his firm’s development of the former Carson Pirie Scott building and Block 37, both located in Chicago’s Loop. In February 2016, a jury found Freed guilty of “double-pledging” millions of dollars of city subsidies for the Goldblatt’s project. Freed used the same subsidies (assets) as collateral for loans from two different lenders. In addition, Freed was convicted of withdrawing millions from the Streets of Woodfield project without the knowledge and consent of his partner. http://www.chicagotribune.com/business/ct-developer-larry-freed-guilty-20160225-story.html https://www.chicagobusiness.com/realestate/20170821/CRED03/170829987/chicago-developer-laurance-freed-gets-three-years-in-prison

    Continue reading