Beware of Timeshare Resale Fraud

/in /by

Telemarketing companies that market their advertising services to timeshare owners interested in selling or renting their timeshare interests are attracting the attention of the Florida Attorney General. Many of these companies charge exorbitant fees and perform very few services, according to the Attorney General’s Office.  

Under Florida law, these companies are called “Resale Service Providers” and are required to provide a written disclosure of the fees and costs relating to advertising, listing, or sale of a timeshare interest, as well as other disclosures. Consumers also should request a contract in writing prior to providing any payment information.

In addition, consumers should be cautious of any business that may request an advance fee prior to performing any services. Furthermore, no government entity will require a consumer to pay money up front in order to assist that consumer in pursuing a fraud claim or prior to making attempts to secure a refund for a consumer. Also, consumers should be aware that the Florida Office of the Attorney General does not contract with any third party companies to assist in obtaining refunds or restitution for individuals. Should any company imply that they are working with the Florida Office of the Attorney General, consumers are encouraged to file a complaint.

Also be suspicious of any business that requests fees be paid by certified bank check, cashier’s check, money order, or wire transfer. These forms of payment leave little recourse for the consumer should there be any difficulty with the business providing their services as contracted.

Consumers who are considering conducting business with a timeshare reseller or recovery company should research the company.

Fort Lauderdale Condominium Litigation Attorney

This update on news affecting South Florida condominium owners is offered as a service of Fort Lauderdale condo attorney Marcy Resnik. Contact her to discuss legal questions you might have in regard to your condominium association or timeshare unit. You can reach Ms. Resnik online or call her at 954-321-0176.

SEC Freezes Assets of Aubrey Lee Price for Florida, Georgia Scam

/in /by

A $40 million investment fraud by Aubrey Lee Price targeting Florida and Georgia investors has resulted in a court order freezing the assets of the Georgia-based investment adviser, who has apparently gone into hiding.

The SEC alleges that Aubrey Lee Price raised money from more than 100 investors living primarily in Georgia and Florida by selling shares in an unregistered investment fund (PFG) that he managed. Price purported to invest fund assets in traditional marketable securities, but he also made illiquid investments in South America real estate and a troubled South Georgia bank.

In order to conceal mounting losses of investor funds, Price created bogus account statements with false account balances and returns that were provided to investors and bank regulators.

According to the SEC’s complaint filed in U.S. District Court for the Northern District of Georgia, Price is believed to be a resident of Lowndes County in Georgia after moving from Manatee County, Florida.

The SEC alleges that Price began his scheme in 2008. According to PFG’s private placement memorandum, the investment objective was to achieve “positive total returns with low volatility” by investing in a variety of opportunities, including equity securities traded on the U.S. markets.

A significant portion of PFG investor funds – approximately $36.9 million – was placed in a securities trading account at a broker-dealer. The trading account suffered massive trading losses and money was frequently wire-transferred to PFG’s operating bank account. Throughout the time during which PFG suffered trading losses, client account statements prepared by Price were made available to investors indicating fictitious amounts of assets and investment returns.

According to the SEC’s complaint, Price has sent a letter to some individuals dated June 2012 and titled “Confidential Confession For Regulators – PFG, LLC and PFGBI, LLC Summary.” In the 22-page letter, Price admits that he “falsified statements with false returns” in order to conceal between $20 million and $23 million in investor losses.

The SEC’s complaint charged Price and his related companies, PFG, LLC; PFGBI, LLC; Montgomery Asset Management, LLC (Florida); and Montgomery Asset Management, LLC (Georgia) with violations of Section 10(b) and of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and further charged Price and Montgomery Asset Management, LLC (Florida) with violations of Sections 206(1), (2) and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder.

The Honorable Timothy C. Batten, Sr. granted the SEC’s request for a temporary restraining order and entered an asset freeze for the benefit of investors against Price, PFG, and his affiliated entities. Judge Batten has scheduled a court hearing on July 13, 2012 for the SEC’s motion for a preliminary injunction.

Anyone with information about Price’s whereabouts should contact the Atlanta office of the Federal Bureau of Investigation at 404-679-9000 or the Lowndes County Sheriff’s Office at 229-671-2985. [SEC v. Aubrey Lee Price, et al. Case No. 1:12-CV-2296 (N.D. Ga.)] (LR-22409)

Fort Lauderdale Securities Litigation Attorney and FINRA Arbitrator

Contact Fort Lauderdale securities litigation attorney Howard N. Kahn, Esq. if you or someone you know has a securities dispute. In addition to being an experienced securities litigation attorney, Mr. Kahn also serves as a FINRA arbitrator for individual investors, brokers, and brokerage firms. You can reach him at 954-321-0176 or online.

Florida Condos Face Flood Insurance Rate Hikes

/in /by

The National Flood Insurance Program (NFIP) was extended through September of 2013 as part of recent legislation passed by Congress and signed into law by President Obama on June 29, 2012. South Florida condo associations are among many flood insurance policyholders who are likely to see higher premiums.

The federal flood program, which was set to expire at the end of July 2012, is $18 billion in debt. Several rate increases are authorized in the new law in an effort to restore solvency, including:

  • Annual allowable premiums may jump from 10 percent to 20 percent a year. Under the maximum allowable annual increase, flood insurance rates could conceivably double in as little as four years.
  • Owners of currently subsidized homes considered to be high risk, such as vacation homes or homes with repeated claims, may see required annual rate increases of 25 percent. South Florida coastal areas are particularly at risk.
  • Deductibles will be set at a minimum of $1,000 or $2,000, depending on the property.

Florida homeowners and condominium owners make up a disproportionate share of the NFIP program. More than a third of the flood insurance program’s 5.6 million policies are in Florida, according to the Sun-Sentinel, including about 930,000 policies in Broward, Palm Beach and Miami-Dade counties.

Statewide, 80 percent of Florida’s 15 million residents live or work near the coast, according to the Federal Emergency Management Association (FEMA). Many others live near the state’s rivers or other inland floodplains. That means most Florida residents face the dangers of flooding, according to state and federal officials.

Fort Lauderdale Condominium Litigation Attorney

This update on news affecting South Florida condominium owners is offered as a service of Fort Lauderdale condo attorney Marcy Resnik. Contact her to discuss legal questions you might have in regard to your condominium association. You can reach Ms. Resnik online or call her at 954-321-0176.

FINRA Launches Large Arbitration Case Pilot Program

/in /by

Large arbitration cases involving claims of $10 million or more are the focus of a new pilot program recently launched by the Financial Industry Regulatory Authority (FINRA).

The program enables parties to customize the administrative process to better suit special needs of a larger case and allows them to bypass certain FINRA arbitration rules. Participation in the pilot program, which begins today, is voluntary and open to all cases. In order to be eligible, however, all parties will be required to pay for any additional costs of the program and must be represented by counsel.

Linda Fienberg, President of FINRA Dispute Resolution, said, “In response to the increasing number of very large cases, we wanted to introduce a more formal approach to give parties greater flexibility and more control over the administration of their case.”

Examples of how parties may customize the process include having the option to:

  • Have additional control over the method of arbitrator appointment and the qualifications of arbitrators;
  • Hire non-FINRA arbitrators for their case;
  • Develop their own procedures for exchanging information prior to the hearing;
  • Have expanded discovery options such as depositions and interrogatories; and
  • Choose from a wider selection of facilities.

All parties must agree and will be required to pay for any additional costs of the program such as costs for enhanced facilities or additional arbitrator honorariums. FINRA will send a letter to parties in cases involving claims of $10 million or more to solicit participation in the pilot.

Fort Lauderdale Securities Litigation Attorney and FINRA Arbitrator

Contact Fort Lauderdale securities litigation attorney Howard N. Kahn, Esq. if you or someone you know has a securities dispute. In addition to being an experienced securities litigation attorney, Mr. Kahn also serves as a FINRA arbitrator for individual investors, brokers, and brokerage firms. You can reach him at 954-321-0176 or online.

Supreme Court Upholds Health Care Mandate as Tax

/in /by

The individual health care mandate was upheld as a tax, while the Medicaid expansion is said to violate the Constitution, according to the Supreme Court’s widely anticipated ruling this morning. Excerpts of the Court opinion appear below.

In 2010, Congress enacted the Patient Protection and Affordable Care Act in order to increase the number of Americans covered by health insurance and decrease the cost of health care. One key provision is the individual mandate, which requires most Americans to maintain“minimum essential” health insurance coverage.

For individuals who are not exempt, and who do not receive health insurance through an employer or government program, the means of satisfying the requirement is to purchase insurance from a private company. Beginning in 2014, those who do not comply with the mandate must make a “[s]hared responsibility payment” to the Federal Government. The Act provides that this “penalty” will be paid to the Internal Revenue Service with an individual’s taxes, and “shall be assessed and collected in the same manner” as tax penalties.

Another key provision of the Act is the Medicaid expansion. The current Medicaid program offers federal funding to States to assist pregnant women, children, needy families, the blind, the elderly, and the disabled in obtaining medical care. The Affordable Care Act expands the scope of the Medicaid program and increases the number of individuals the States must cover.

The most straightforward reading of the individual mandate is that it commands individuals to purchase insurance. But, for reasons explained, the Commerce Clause does not give Congress that power. It is therefore necessary to turn to the Government’s alternative argument: that the mandate may be upheld as within Congress’s power to “lay and collect Taxes.”

The opinion of the Court with respect to Part III–C concludes that the individual mandate may be upheld as within Congress’s power under the Taxing Clause.

The Court rules that the Medicaid expansion violates the Constitution by threatening States with the loss of their existing Medicaid funding if they decline to comply with the expansion.

Read the full Supreme Court Ruling on the Patient Protection and Affordable Care Act.

Fort Lauderdale Litigation Attorneys

The attorneys at Kahn & Resnik, P.L. take a concierge approach to legal services. We serve business owners, professionals, and individuals dealing with commercial contract disputes, a difficult divorce, mortgage foreclosure, or other legal disputes.

We understand that your need for sound legal counsel extends beyond the 9:00 to 5:00 work day, and make ourselves available on your schedule. Contact attorney Howard Kahn, Esq. to discuss a case.

 

Home Preservation Forum, Saturday June 30

/in /by

Florida homeowners in danger of default or mortgage foreclosure will have a chance to speak directly with lenders at a “Home Preservation Forum” being sponsored by the Broward Housing and Community Development Task Force and the City of North Lauderdale.

Date and Place:
Saturday, June 30, 2012
10:00 a.m. to 2:00 p.m.
City of North Lauderdale’s Municipal Complex
701 SW 71st Avenue
North Lauderdale, FL 33068
For more information, call 1-877-686-0623

Participating lenders include Bank of America, SunTrust, Chase, Wells Fargo, Fannie Mae, and Freddie Mac. Homeowners should bring current copies of their pay stubs, bank statements, income tax returns, mortgage statement, utility bill, and any hardship letter they might have.

Homeowners will meet with lenders on the spot and decisions will be made that day.

Fort Lauderdale Foreclosure Defense Attorney

If you are at risk of losing your home to mortgage foreclosure, there is action you can take. Contact Fort Lauderdale mortgage foreclosure attorney Marcy Resnik to discuss how you can defend your legal rights in a foreclosure. You can contact Ms. Resnik online or call her at 954-321-0176.

FINRA Fines Merrill Lynch $2.8 Million for Overcharging Customers

/in /by

Merrill Lynch, Pierce, Fenner & Smith, Inc. was fined $2.8 million by FINRA for supervisory failures that resulted in overcharging customers $32 million in unwarranted fees, and for failing to provide certain required trade notices. Merrill Lynch has provided $32 million in remediation, plus interest, to the affected customers.

Brad Bennett, FINRA’s Executive Vice President and Chief of Enforcement, said, “Investors must be able to trust that the fees charged by their securities firm are, in fact, correct. When this is not the case, investor confidence is threatened.”

FINRA found that from April 2003 to December 2011, Merrill Lynch failed to have an adequate supervisory system to ensure that customers in certain investment advisory programs were billed in accordance with contract and disclosure documents. As a result, the firm overcharged nearly 95,000 customer accounts fees of more than $32 million. Merrill Lynch has since returned the unwarranted fees, with interest, to the affected customers.

Merrill Lynch also failed to provide timely trade confirmations to customers in certain advisory programs due to computer programming errors. As a result, from July 2006 to November 2010, Merrill Lynch failed to send customers trade confirmations for more than 10.6 million trades in over 230,000 customer accounts. In addition, Merrill Lynch failed to properly identify whether it acted as an agent or principal on trade confirmations and account statements relating to at least 7.5 million mutual fund purchase transactions. At various times, Merrill Lynch also failed to deliver certain proxy and voting materials, margin risk disclosure statements and business continuity plans.

In concluding this settlement, Merrill Lynch neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.

Fort Lauderdale Securities Litigation and FINRA Arbitration

Contact Fort Lauderdale securities litigation attorney Howard N. Kahn, Esq. if you or someone you know has a securities dispute. In addition to being an experienced securities litigation attorney, Mr. Kahn also serves as a FINRA arbitrator for individual investors, brokers, and brokerage firms. You can reach him at 954-321-0176 or online.

SEC Charges Orlando Buddy Persaud, White Elephant Trading in Ponzi Scheme

/in /by

Gurudeo “Buddy” Persaud of Orlando, Fla. lured family, friends, and others into investing in his firm, White Elephant Trading Company LLC, by falsely guaranteeing their money would be safe and yield lofty returns ranging from 6 to 18 percent, according to SEC charges.

Persaud told investors he would invest in the debt, stock, futures, and real estate markets, but did not reveal that his trading strategy was based on his belief that markets are affected by gravitational forces.

According to the SEC’s complaint filed in U.S. District Court for the Middle District of Florida, Persaud used investors’ money to make payments to other investors, the hallmark of a Ponzi scheme. Persaud also lost $400,000 of investor funds through his trading and diverted at least $415,000 to pay for his personal expenses, the SEC alleged. The same month Persaud began receiving investor money, he started using some of that money for his personal expenses. The SEC said that Persaud created phony account statements to hide his trading losses and give investors a false sense of security.

“Persaud preyed on people who trusted him by promising high and steady returns while hiding his unconventional trading strategy,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “When Persaud blatantly lied to investors and hid their losses through a Ponzi scheme, he should have known that an SEC enforcement action was in the stars.”

Persaud was a registered representative at a Florida-based broker-dealer but separately operated the now-inactive White Elephant, starting in mid-2007. In all, Persaud raised more than $1 million from at least 14 investors between July 2007 and January 2010.

The SEC alleges that in making trading decisions, Persaud chiefly relied on an Internet service that provided directional market forecasts based on lunar cycles and gravitational pull. Persaud’s strategy was premised on the idea that gravitational forces affect mass human behavior, and in turn, the stock market. For example, Persaud believed that when the moon exerts greater gravitational pull on the Earth, people feel dejected and are more inclined to sell securities.

The SEC’s complaint seeks disgorgement of ill-gotten gains, financial penalties, and injunctive relief against Persaud to enjoin him from future violations of the federal securities laws.

Fort Lauderdale Securities Litigation and FINRA Arbitration

Contact Fort Lauderdale securities litigation attorney Howard N. Kahn, Esq. if you or someone you know has a securities dispute. In addition to being an experienced securities litigation attorney, Mr. Kahn also serves as a FINRA arbitrator for individual investors, brokers, and brokerage firms. You can reach him at 954-321-0176 or online.

Florida Court Enters Final Judgment against James Clements & Zeina Smidi

/in /by

A Ponzi scheme that offered investors guaranteed monthly returns ended in a court judgment. Defendants Clements and Smidi first told investors they would use investor proceeds to trade in foreign currencies and later stated they would use proceeds to invest in Swiss high-yield, fixed-rate savings accounts. In reality, however, Clements and Smidi siphoned approximately $3 million of investors’ money to their personal bank accounts, and paid out approximately $3 million for travel, expenses, and luxury items. [SEC v. Clements, Civil Action No. 11-60673-CIV- Dimitrouleas/Snow (S.D. Fla.)]

The Commission announced that on May 21, 2012, a District Judge in the Southern District of Florida entered Final Judgments Ordering Disgorgement, Prejudgment Interest and a Civil Penalty against Defendants James Clements and Zeina Smidi. Pursuant to Section 20(d) of the Securities Act of 1933 (Securities Act) and Section 21(d) of the Securities Exchange Act of 1934 (Exchange Act), District Court Judge William P. Dimitrouleas ordered Defendant Clements to pay disgorgement of $339,451, prejudgment interest of $88,975.66, and a civil penalty of $339,451, and ordered Defendant Smidi to pay disgorgement of $2,492,000, prejudgment interest of $611,837.60, and a civil penalty of $2,492,000.

The District Court previously entered by consent permanent injunctions against Clements and Smidi on February 6 and 17, 2012. The permanent injunctions enjoined Clements from future violations of Securities Act Sections 5(a), 5(c), and 17(a), and Exchange Act Sections 10(b), 15(a), and Exchange Act Rule 10b-5, and enjoined Smidi from future violations of Exchange Act Section 10(b), and Exchange Act Rule 10b-5. Clements and Smidi neither admitted nor denied the allegations of the complaint in their consents.

Fort Lauderdale Securities Litigation and FINRA Arbitration

Contact Fort Lauderdale securities litigation attorney Howard N. Kahn, Esq. if you or someone you know has a securities dispute. In addition to being an experienced securities litigation attorney, Mr. Kahn also serves as a FINRA arbitrator for individual investors, brokers, and brokerage firms. You can reach him at 954-321-0176 or online.

SEC Charges Anthony Massaro of Boynton Beach in Agape Ponzi Scheme

/in /by

A $415 million Ponzi scheme by Agape World Inc. of Long Island in New York is the basis for SEC charges against 14 sales agents, including one in South Florida, who misled investors and illegally sold securities to 5,000 investors nationwide.

The SEC alleges that the sales agents – which include four sets of siblings – falsely promised investor returns as high as 12 to 14 percent in several weeks when they sold investments offered by Agape World Inc. They also misled investors to believe that only 1 percent of their principal was at risk.

The Agape securities they peddled were actually non-existent, and investors were merely lured into a Ponzi scheme where earlier investors were paid with new investor funds. The sales agents turned a blind eye to red flags of fraud and sold the investments without hesitation, receiving more than $52 million in commissions and payments out of investor funds. None of these sales agents were registered with the SEC to sell securities, nor were they associated with a registered broker or dealer. Agape also was not registered with the SEC.

“This Ponzi scheme spread like wildfire through Long Island’s middle-class communities because this small group of individuals blindly promoted the offerings as particularly safe and profitable,” said Andrew M. Calamari, Acting Regional Director for the SEC’s New York Regional Office. “These sales agents raked in commissions without regard for investors or any apparent concern for Agape’s financial distress and inability to meet investor redemptions.”

According to the SEC’s complaint filed in the U.S. District Court for the Eastern District of New York, more than 5,000 investors nationwide were impacted by the scheme that lasted from 2005 to January 2009, when Agape’s president and organizer of the scheme Nicholas J. Cosmo was arrested. He was later sentenced to 300 months in prison and ordered to pay more than $179 million in restitution.

The SEC alleges that the sales agents misrepresented to investors that their money would be used to make high-interest bridge loans to commercial borrowers or businesses that accepted credit cards. Little, if any, investor money actually went toward this purpose. Investor funds were instead used for Ponzi scheme payments and the agents’ sales commissions, and Cosmo lost $80 million while trading futures in personal accounts.

Meanwhile, the sales agents assuredly offered and sold Agape securities to investors despite numerous red flags of fraud including Cosmo’s prior conviction for fraud, the too-good-to-be-true returns, and the incredible safety of principal promised to investors. The sales agents also ignored Agape’s relatively small and unknown status as a private issuer of securities, Agape’s series of extensions and defaults, and other dire warnings about Agape’s financial condition. None of the Agape securities offerings were registered with the SEC.

The SEC’s complaint charges the following sales agents:

  • Brothers Bryan Arias and Hugo A. Arias of Maspeth, N.Y., who offered and sold Agape securities to at least 195 and 1,419 investors respectively. They received more than $9.5 million combined in commissions and payments.
  • Brothers Anthony C. Ciccone of Locust Valley, N.Y. and Salvatore Ciccone of Maspeth, N.Y., who offered and sold Agape securities to at least 535 and 348 investors respectively. They received more than $17 million combined in commissions and payments.
  • Brothers Jason A. Keryc of Wantagh, N.Y. and Michael D. Keryc of Baldwin, N.Y. Jason Keryc offered and sold Agape securities to at least 1,617 investors and received at least $16 million in commissions and payments. He also paid sub-brokers, including his brother, at least $7.4 million to sell Agape securities for him. Michael Keryc offered and sold Agape securities to at least 177 investors and received more than $1 million in commissions and payments.
  • Siblings Martin C. Hartmann III of Massapequa, N.Y. and Laura Ann Tordy of Wantagh, N.Y. Hartmann enlisted his sister in his sales effort while he worked as a sub-broker for Jason Keryc. Hartmann and Tordy offered and sold Agape securities to at least 441 investors and received more than $3.5 million in commissions and payments.
  • Christopher E. Curran of Amityville, N.Y., who worked as a sub-broker for Keryc. Curran offered and sold Agape securities to at least 132 investors and received at least $531,890 in commissions and payments.
  • Ryan K. Dunaske of Ronkonkoma, N.Y., who worked as a sub-broker for Keryc. Dunaske offered and sold Agape securities to at least 70 investors and received more than $700,000 in commissions and payments.
  • Michael P. Dunne of Massapequa, N.Y., who worked as a sub-broker for Keryc. Dunne offered and sold Agape securities to at least 99 investors and received more than $1.5 million in commissions and payments.
  • Diane Kaylor of Bethpage, N.Y., who offered and sold Agape securities to at least 249 investors and received at least $3.7 million in commissions and payments.
  • Anthony Massaro of Boynton Beach, Fla., who offered and sold Agape securities to at least 826 investors and received more than $5.9 million in commissions and payments.
  • Ronald R. Roaldsen, Jr. of Wantagh, N.Y., who worked as a sub-broker for Keryc. Roaldsen offered and sold Agape securities to at least 159 investors and received more than $600,000 in commissions and payments.

The SEC’s complaint charges Bryan and Hugo Arias, Anthony and Salvatore Ciccone, Jason and Michael Keryc, Dunne, Hartmann, Kaylor, Massaro, and Tordy with violations of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint charges all 14 defendants with violations of Section 15(a) of the Exchange Act, and Sections 5(a) and 5(c) of the Securities Act.

Fort Lauderdale Securities Litigation and FINRA Arbitration

Contact Fort Lauderdale securities litigation attorney Howard N. Kahn, Esq. if you or someone you know has a securities dispute. In addition to being an experienced securities litigation attorney, Mr. Kahn also serves as a FINRA arbitrator for individual investors, brokers, and brokerage firms. You can reach him at 954-321-0176 or online.