SEC Charges First Resource Group with Stock Fraud

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The Securities and Exchange Commission (SEC) recently charged Fort Lauderdale-based First Resource Group LLC and its principal David H. Stern with conducting a fraudulent boiler room scheme. The company allegedly hyped stock in TrinityCare Senior Living Inc. and Cytta Corporation, both thinly-traded penny stock companies, while simultaneously selling the same stock themselves for illegal profits.

According to an SEC news release:
“The SEC alleges that First Resource Group LLC and its principal David H. Stern employed telemarketers who fraudulently solicited brokers to purchase stock in TrinityCare Senior Living Inc. and Cytta Corporation. While recommending the securities in these two microcap companies, Stern sold First Resource’s shares of TrinityCare and Cytta stock unbeknownst to investors who were purchasing them – a practice known as scalping. As Stern was selling the stocks, he also purchased small amounts in order to create the false appearance of legitimate trading activity and induce investors to purchase shares in both companies.”

Read the full SEC charges against First Resource Group LLC and its principal David H. Stern. Read the court complaint from the U.S. District Court in the Southern District of Florida.

If you bought stock from First Resource Group LLC of Fort Lauderdale, FL or David H. Stern, contact Fort Lauderdale securities attorney Howard Kahn to discuss your legal options.

Mortgage Foreclosure Settlement for Florida Homeowners

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The State of Florida today entered into a $25 billion joint federal-state agreement with the nation’s five largest mortgage servicers over foreclosure abuses and unacceptable nationwide mortgage servicing practices, according to a news release issued by Florida Attorney General Pam Bondi.

The  five banks covered in the agreement are Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. Together, the five firms handle payments on 55% of all home loans outstanding, or about 27 million mortgages, according to Inside Mortgage Finance.

Florida’s share of the total monetary benefits under the settlement is approximately $8.4 billion, according to Attorney General Bondi. Highlights include:

  • Florida borrowers will receive an estimated $7.6 billion in benefits from loan modifications, including principal reduction, and other direct relief.
  • Approximately $170 million will be available for cash payments to Florida borrowers who lost their home to foreclosure from January 1, 2008 through December 31, 2011 and suffered servicing abuse.
  • The value of refinanced loans to Florida’s underwater borrowers would be an estimated $ 309 million.
  • The state will receive a direct payment of $ 350 million.

In addition to the terms of the national settlement agreement, Attorney General Bondi separately negotiated an agreement with the nation’s three largest mortgage servicers to ensure that a guaranteed portion of the overall settlement funds goes to Florida borrowers.

The agreement does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases against the five mortgage servicers.

Fort Lauderdale mortgage foreclosure defense attorneys Marcy Resnik and Howard Kahn are available to answer your questions about what this landmark agreement means to you. If your home is underwater or you are in foreclosure on your mortgage, call us at 954-321-0176 or Contact Us online.

Read the full release titled: Florida Enters $25 Billion Joint State-Federal Mortgage Servicing Settlement.

FINRA Charges Charles Schwab with Rule Violations

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The Financial Industry Regulatory Authority (FINRA) accused Charles Schwab Corporation of limiting customers legal rights in a complaint filed on February 1, 2012.

FINRA’s complaint alleges that Charles Schwab & Company violates FINRA rules by requiring its customers to waive their rights to bring class action lawsuits against the firm.

Schwab reportedly modified its customer account agreement in October, 2011, to include a provision requiring customers to waive their rights to bring or participate in class action lawsuits where Schwab is named as a defendant.

Almost 7 million Schwab customers received the amended agreements.

According to a FINRA news release:

“The agreement also included a provision requiring customers to agree that arbitrators in arbitration proceedings would not have the authority to consolidate more than one party’s claims. FINRA’s complaint charges that both provisions violate FINRA rules concerning language or conditions that firms may place in customer agreements.

FINRA’s complaint seeks an expedited hearing because Schwab’s conduct is ongoing, as the firm has continued to use account agreements containing these provisions in opening more than 50,000 new customer accounts since October 2011.”

If you are an active stock market investor and have a Schwab account, this provision may apply to you. Contact Fort Lauderdale securities attorney Howard Kahn, Esq. at 954-321-0176 or via email to discuss your case.

Click here to read a copy of FINRA’s complaint against Charles Schwab.

Investor Options in Resolving Securities-Related Disputes

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Investors have several dispute resolution options when facing security-related disputes. The Financial Industry Regulatory Authority (FINRA) recommends that investors consider the dispute resolution techniques outlined below.

First, the investor should contact their brokerage firm and report the discrepancy or dispute, in writing, to the appropriate department or manager.  Often, the brokerage firm will have authority or insight on how to rectify the problem quickly and easily.

Next, the investor may want to initiate arbitration against the broker or the brokerage firm.  Arbitration is an efficient and inexpensive method of resolving disputes between parties by neutral, qualified individuals who serve as decision makers after hearing all facts from all parties involved.  Arbitration awards are final, binding and subject to court review only in limited situations.  Thus, pursuing claims through arbitration usually precludes investors from pursuing the same claims through the courts.

An investor may file a Request for Mediation to FINRA, at any time.  Once FINRA receives the request, they will contact all parties to explain the mediation process and seek their agreement.  Mediation must be agreed upon by all parties.

Other resolution alternatives include filing a complaint with the SEC, the FINRA Investor Complaint Center, or with state securities regulators.  If there is evidence of illegal or unethical activity by a broker or brokerage firm, investors may file a tip with FINRA’s or SEC’s Office of the Whistleblower.

Finally, if an investor is seeking arbitration it is advised to choose an attorney.  If an investor cannot afford an attorney, some law schools provide legal representation through securities arbitration clinics.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

$75 Million Florida Charity Scam at We the People is Target of SEC Charges

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Richard K. Olive and Susan L. Olive raised $75 million through the sale of fraudulent charitable gift annuity (CGA) investments, according to the SEC. More than 400 investors in Florida, Colorado, Texas, and other states thought they were making contributions to We The People Inc., a purported charitable organization in Tallahassee, Fla.

Most of the investor money actually went to the Olives and other third-party promoters and consultants. Only a small amount of the money raised was actually directed to charitable services. The Olives also received more than $1.1 million in salary and commissions, in addition to siphoning off funds for their personal use.

The SEC further alleges that the Olives lured elderly investors with limited investing experience into the scheme by making a number of false representations about the purported value and financial benefits of We The People’s CGAs. The Olives also lied about the safety and security of the investments.

“The Olives raised millions from senior citizens by claiming that We The People’s so-called CGAs provided attractive financial benefits and were re-insured and backed by assets held in trust,” said Julie Lutz, Associate Director of the SEC’s Denver Regional Office. “Investors were not given the full story about the true value and security of their investments.”

According to the SEC’s complaint against the Olives filed in U.S. District Court for the Southern District of Florida, investors were coaxed to transfer assets including stocks, annuities, real estate, and cash to We The People in exchange for a CGA. We The People claimed to operate as a non-profit organization while it was offering the CGAs from June 2008 to April 2012.

However, We The People was not operating as a charity but instead for the primary purpose of issuing CGAs and using the proceeds to pay substantial sums to the Olives, third-party promoters, and consultants. On rare occasions when We The People did actually direct money raised toward charitable services, it was insignificant. For instance, the organization made public statements that it donated $21.8 million in relief aid to AIDS orphans in Zambia, but in fact the supplies were donated by others and We The People merely made a small payment to the third party that was shipping the supplies.

We The People consented to a final judgment that will enable the appointment of a receiver to protect more than $60 million of investor assets still held by the company. The final judgment also provides for disgorgement of ill-gotten gains and provides injunctive relief under the antifraud and registration provisions of the federal securities laws.

Reeves entered into a cooperation agreement with the SEC, and the terms of his settlement reflect his assistance in the SEC’s investigation and anticipated cooperation in its pending action against the Olives. Reeves agreed to be suspended from appearing or practicing before the SEC for at least five years, and consented to a final judgment providing injunctive relief under the provisions of the federal securities laws that he violated. The court will determine at a later date whether a financial penalty should be imposed against Reeves.

History of Fraudulent Transactions

In March of 2010, Insurance & Financial Advisor reported that Richard and Susan Olive, owners of Franklin, Tenn.-based National Foundation of America (NFOA), were indicted for similar investor scams, according to the Tennessee Attorney General’s Office and Williamson County District Attorney’s Office. The assets of NFOA were seized and placed into receivership. The company had been involved in a separate civil receivership case dating back to May 2007.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

Mortgage Foreclosure Help for Florida Homeowners

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Help for homeowners with underwater mortgages is the goal of the Obama Administration’s revised Home Affordable Refinance Program. HARP 2.0, scheduled for implementation in March, aims to help homeowners who are current with their mortgage refinance loans backed by Fannie Mae or Freddie Mac.

A key feature of HARP 2.0 is the elimination of the loan-to-value (LTV) cap, which was previously set within a range of 80 to 125 percent. Lender participation in the program is voluntary, meaning that some banks may choose to stay within lower LTV ratios.

Homeowners who qualify for refinancing at a lower interest rate will see reductions in their monthly payment, which gives them the option to either save on monthly expenses or accelerate repayment of the mortgage.

In Florida, 182,000 properties were in foreclosure in 2011, according to RealtyTrac. The situation is particularly acute in South Florida, where one in every 261 homes across Miami-Dade, Broward and Palm Beach counties is in foreclosure.

The Administration also announced a Federal Housing Finance Administration (FHFA) pilot program to transition Real Estate Owned (REO) properties into rental housing.

The HARP 2.0 proposal requires Congressional approval before it takes effect.

If you owe more on your house than it is worth and are in or at risk of mortgage foreclosure, contact Fort Lauderdale foreclosure defense attorney Marcy Resnik, Esq., to discuss your legal options.

Beware of Timeshare Resale Fraud Scam

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Florida timeshare owners who get a telephone call promising the lure of a monetary refund in exchange for an upfront payment should be alert to fraud.

The Florida Department of Business and Professional Regulation recently issued a consumer advisory after learning that individuals posing as Department employees are allegedly targeting victims of timeshare scams. The callers are asking victims for cash to pursue refunds for the money they lost.

The Department has received at least three complaints from victims who have reported receiving calls from people claiming to be DBPR employees from the “Fraud Unit.”

The victims have already lost money as the result of potential timeshare resale fraud and the callers are asking for cash in order to obtain full repayment for the victims. The Department does not have a “Fraud Unit” and has confirmed that the phone calls are in no way connected with the Department or its regulatory authority.

If you receive a call from someone claiming to be a DBPR employee who is asking for money in order to receive a refund, do not give out any personal or financial information.

If the person calling claims to be a telemarketer, consumers may report the call to the Florida Department of Agriculture and Consumer Services at 1-800-HELP-FLA (1-800-435-7352) or at www.freshfromflorida.com.

A Public Service Announcement from the Fort Lauderdale Law Firm of
Kahn & Resnik, P.L.

The Florida lawyers at Kahn & Resnik, P.L. are available to service your legal needs.

Our concierge approach to the practice of law reflects our philosophy of personalized and confidential attention. When you retain an attorney at Kahn & Resnik, P.L., we work efficiently and effectively to help you achieve your business and personal objectives.

We can assist you in legal matters relating to commercial litigation, divorce, disability law, real estate litigation, securities litigation, and corporate transactions.

We serve business owners, professionals and individual clients across Florida, including Miami, Fort Lauderdale, Boca Raton, West Palm Beach, Naples, Orlando, Tampa, Daytona Beach, Jacksonville, Tallahassee, and other cities throughout the state. Contact Howard N. Kahn, Esq. at 954-321-0176 or online.

Concierge Legal Service Launched by Kahn & Resnik, P.L.

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The Fort Lauderdale law firm of Kahn & Resnik, P.L., today announces the availability of concierge legal services for Florida business owners, doctors, accountants, other professionals, and families in need of experienced legal counsel.

The firm’s concierge approach to law emphasizes personal attention and responsive service over the life cycle of a business, career or a family generation. Attorneys Howard Kahn, David , and Marcy Resnik provide confidential legal guidance for commercial litigation, divorce, real estate litigation, securities arbitration and litigation, disability law for professionals, and corporate transactions.

Read the full release on this Fort Lauderdale concierge law firm.

Yitzchak Zigdon Settles SEC Charges in CO2 Tech Pump-and-Dump Scheme

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Yitzchak Zigdon is one of several defendants named in a 2011 SEC complaint relating to a $7 million alleged fraud scheme to sell CO2 Tech stock at artificially inflated prices.

In the original complaint, the Commission alleged that CO2 Tech Ltd. was a sham company without significant assets or operations whose stock prices were quoted in the Pink Sheets. According to the complaint, among other things, Zigdon provided the paper work necessary to establish the account that was used to dump the shares of CO2 Tech on to the market.

The complaint also stated that Zigdon caused materially false and misleading information about CO2 Tech to be disseminated in press releases and on its website. In particular, the complaint alleged that CO2 Tech falsely touted business relationships that the company had not formed, including a relationship with the Boeing Company when, in fact, there had been no communications, correspondence or understandings between CO2 Tech and Boeing.

On January 23, 2013, the U.S. District Court for the Southern District of Florida entered a final judgment by consent against Yitzchak Zigdon in the SEC’s enforcement action against seven defendants concerning the common stock of CO2 Tech Ltd.

The final judgment enjoins Zigdon from future violations of Sections 5(a), 5(c) and 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 Court also ordered Zigdon to pay disgorgement of $260,000, prejudgment interest of $74,516 and a civil penalty in the amount of $130,000 for a total of $464,516 in monetary sanctions.

In addition, the Court barred Zigdon from participating in an offering of penny stock. Zigdon consented to the entry of the final judgment without admitting or denying any of the allegations of the Commission’s Complaint.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

State of Union Overlooks Healthcare Reform

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South Florida doctors and patients may have noticed that healthcare reform took a distant second place to the economy in Pesident Barack Obama’s State of the Union speech to Congress last week.

In his 70-minute speech, Obama mentioned either “healthcare” or “health insurance” only 3 times, compared to 6 references in 2011 and 10 in 2010. Medicare and Medicaid were each mentioned just once.

Read more about the conspicuous absence of healthcare reform in an article titled, “State of the Union Speech Long on Jobs, Short on Healthcare,” published by Medscape Medical News.