• Banks mug shot
    August 25, 2017

    Virginia radio show host indicted for investment fraud

    Daryl Gene Bank, Dominion Investment Group Investment Fraud Daryl Gene Bank, who styled himself a “financial guru and best-selling author,” was arrested on Thursday on federal criminal charges of fraud. Bank co-hosted the syndicated talk show “Daryl & the Bull,” which offered financial advice and appeared to be carried in at least 11 states. His show was sponsored by his companies. Bank and Raeann Gibson, fellow owner of Dominion Investment Group, have been indicted for promising large returns to hundreds of investors when they really were operating a Ponzi scheme and using investor funds to line their own pockets, according to an article in The Virginia Pilot. The paper reports that about 300 investors lost more than $20 million. Starting in 2012 Bank induced investors to invest in what they thought were $25,000 franchises for a chain of dentist offices as well as securities in Federal Communications Commission cellular spectrum licenses, according to the indictment. The indictment further reports that much of the money was diverted to accounts under Bank’s control or paid to early investors to make it appear as if the investment was solid. This is particularly egregious because many people trust someone who has a radio or television show. Please be aware that just because someone appears on a radio or television show, that does not mean you should trust them with your money. Bank’s radio program was sponsored by companies that he owned. You just can’t rely on your radio or television station to verify the trustworthiness of what they broadcast. Another reason this is particularly egregious is because this fraudster operated in a military community. It is highly likely that his victims include active and retired members of the military. As the sister of a retired Air Force officer, this drives me nuts. Fraud is never justified, but defrauding members of the military and their families is particularly galling. Members of the military have signed on to put their lives at risk to protect the rest of us. Many have been deployed overseas and they and their families have endured significant hardships while not making big salaries. There are so many fraudsters who target military and ex-military personnel. Please be skeptical of anyone asking you for money for investments, tuition, car loans, etc. Bank and Gibson have been charged with 15 counts of conspiracy to commit mail and wire fraud, mail and wire fraud and engaging in unlawful monetary transactions.  While the government has identified real estate, luxury cars, diamonds, and cash that the pair have, it does not look like enough to fully compensate investors. Before you invest with anyone, please do a background check. Sadly, Bank had been barred from acting as a representative of a broker-dealer since 2010, before this fraudulent scheme began. Bank settled, without admitting or denying, FINRA charges that he misappropriated over $160,000 of commissions belonging to his employer. Although he was not permitted to register as a broker-dealer representative, he continued to operate his Dominion-related companies through which he engaged in this fraudulent scheme. For more information, see the links below. Link to SEC’s Litigation Release: https://www.sec.gov/news/pressrelease/2015-57.html Link to […]

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  • crumpled dollar bill
    August 24, 2017

    Almost 10 years ago – the beginnings of the Great Recession

    Periodically I go back to one of the best financial podcasts ever – The Giant Pool of Money podcast produced by WBEZ’s This American Life. In this program, public radio journalists relate in a clear and interesting way the causes of the housing crisis and subsequent financial collapse of 2008. They address questions like, what did the housing crisis have to do with the turmoil on Wall Street? Why did banks make half-million dollar mortgage loans to people with no job and no income? How did these risky no-doc (liar’s) loans get rolled into collateralized mortgage obligations (CMOs) that were marketed as low risk investments? As we are now approaching the ten year anniversary of the housing crisis/liquidity crisis/Great Recession, it is worth revisiting what happened and why Congress enacted Dodd-Frank. https://www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money

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  • Bullseye
    August 18, 2017

    Direct vs. derivative claims – Minnesota rejects Delaware test

    It is nice to see a state court take a skeptical look at Delaware corporate governance law. The Minnesota Supreme Court chose not to adopt Delaware law on an important corporate governance question — when is a shareholder’s claim “direct” as opposed to “derivative.” The decision is available here: In re Medtronic, Inc. Shareholder Litigation.  The test of whether a shareholder’s claim is “direct” or “derivative” is important to the outcome of a corporate governance case. As the Minnesota Supreme Court noted “when shareholders are injured only indirectly, the action is derivative; when shareholders show an injury that is not shared with the corporation, the action is direct.” There are procedural obstacles to bringing derivative claims that are not present in direct claims. In the decision, the Minnesota Supreme Court rejected the Delaware direct/derivative test set forth in Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031 (Del. 2004), which had been applied by the district and appellate courts below. The Supreme Court noted “[w]e do not see a need to resort to Delaware law to answer the direct-versus-derivative question here given the guidance available from our own precedent. Moreover, the Tooley test has been limited to claims asserting breach of fiduciary duty.” The Minnesota Supreme Court concluded that claims alleging injuries to shareholders arising out of overpayments made in a business transaction were not derivative claims. In a derivative claim of overpayment, shareholders claim that their shares have diminished in value by reason of the decrease in value of the corporation’s assets. But here, the claims were that shareholder ownership interest and voting power were diluted by the overpayments made in the business transaction. Not only did the shareholders allege losses in the value of their individual shares, they also alleged an injury based on the loss of certain shareholder rights.  Thus, the Supreme court found the shareholders had sufficiently alleged individual shareholder injury. For more detail, see the analysis of Stephen Quilivan of Stinson Leonard Street LLP available here: https://www.lexology.com/library/detail.aspx?g=e180fb40-9907-4b3f-b13b-25bc6b88265f&utm_source=lexology+daily+newsfeed&utm_medium=html+email+-+body+-+general+section&utm_campaign=lexology+subscriber+daily+feed&utm_content=lexology+daily+newsfeed+2017-08-18&utm_term=

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  • money down the drain
    August 18, 2017

    Watch for fees lurking in 401(k) accounts

    Watch those fees in your 401(k) account! There are numerous hidden fees that you should be looking for in employer retirement accounts like 401(k). This piece by John Wasik tells you about some of the biggies — surrender fees, back-end loads, front-end loads, and 12b-1 fees, which are marketing and distribution fees that you should not be paying. Paying 12b-1 fees for an investment fund is like paying Budweiser a separate advertising/marketing fee each time you purchase a six-pack. Who would stand for that?

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