Dan Frishberg “The Money Man” Charged by the SEC with Fraudulent Conduct! BizRadio’s Scam Artist Exposed…

March 25, 2011

To be honest, as I pen this latest blog entry, there is no joy.  Yet, it is not a surprise either.  Dan Frishberg, despite his puffery and position – claiming to the “the Money Man” has finally been charged by the SEC for his role in defrauding numerous investors out of millions.  Today many now know that what has been claimed about Dan is true.  He has not acted in the best interest of his clients and as a result – one of the outcomes is that Dan “The Money Man” Frishberg is barred from association with any investment adviser or certain other registered entities.

The SEC News Release reads as follows in its entirety:

Washington, D.C., March 25, 2011 — The Securities and Exchange Commission today charged Houston-area businessman Daniel Frishberg with fraudulent conduct in connection with promissory note offerings made to clients of his investment advisory firm.

The SEC alleges that Frishberg’s firm Daniel Frishberg Financial Services (DFFS) advised clients to invest in notes issued by Business Radio Networks (BizRadio), a media company founded by Frishberg where he hosts his own show under the nickname “The MoneyMan.” Frishberg failed to tell his clients about BizRadio’s poor financial condition or his significant conflicts of interest with the note offerings that helped fund his salary at BizRadio.

Frishberg agreed to settle the SEC’s charges by paying a $65,000 penalty that will be distributed to harmed investors. He will be barred from future association with any investment adviser.

“Contrary to his obligations as an investment adviser, Frishberg approved risky investment recommendations to his clients without ensuring that the risks and conflicts were properly disclosed,” said Rose Romero, Director of the SEC’s Fort Worth Regional Office. “Frishberg personally benefitted from the questionable investments that were recommended to his clients.”

According to the SEC’s complaint filed in federal district court in Houston, at least $11 million in promissory notes were issued by BizRadio and Kaleta Capital Management (KCM), which is owned by Frishberg’s associate Albert Fase Kaleta. Frishberg and Kaleta jointly controlled BizRadio.

The SEC charged Kaleta and his firm with fraud in 2009, and the court appointed a receiver to marshal the assets of KCM and relief defendants BizRadio and DFFS.

The SEC alleges that Frishberg authorized Kaleta to recommend the notes to DFFS clients, and clients were not provided with critical disclosures. Investors were not told of BizRadio’s poor financial condition and the likely inability of KCM and BizRadio to repay the notes. Nor were investors informed about Frishberg’s significant conflicts of interest in the note offerings because the proceeds funded his salary as a BizRadio talk show host.

The SEC alleges that Frishberg chose Kaleta to recommend the BizRadio notes even though he was aware of complaints about Kaleta’s lack of truthfulness in sales presentations regarding other investments.

The SEC’s complaint alleges that Frishberg violated Section 206(2) of the Investment Advisers Act of 1940 and aided and abetted violations of Sections 206(1) and 206(2) of the Advisers Act.

Without admitting or denying the SEC’s allegations, Frishberg consented to the entry of a permanent injunction against these violations and to pay a $65,000 penalty. Frishberg consented to the establishment of a fair fund for the distribution of his penalty to harmed investors, and agreed to be barred from association with any investment adviser or certain other registered entities.

# # #

For more information about this enforcement action, contact:

Rose Romero
Regional Director, SEC’s Fort Worth Regional Office
(817) 978-3821

Stephen J. Korotash
Associate Regional Director, SEC’s Fort Worth Regional Office
(817) 978-6490

WHAT DOES THIS MEAN?

Well for starters…those who lost a whole bunch of money and thought they might get it back…well think again.  Dan’s $65,000 penalty is a small price to pay for the $11 million fraud.  To be clear, I have not had any inside information, but I suspect that Dan’s out of money otherwise I suspect the SEC would have exacted a larger fine as part of their role is to protect the public.  Oh well…

CRIMINAL INDICTMENT ON THE HORIZON?

Rose Romero, Director of the SEC’s Fort Worth Regional Office stated, “Frishberg personally benefited from the questionable investments that were recommended to his clients.”  So does this mean that he could be the target of a criminal indictment?

So we are all clear, the SEC has NO CRIMINAL enforcement authority – only civil.  Therefore the actions of the SEC are likely the best they could get under the circumstances.  Effectively they squeezed blood out of the turnip and barred Dan from any role as an investment advisor.  Now regarding criminal…well, as I’m told the statue of limitations is longer for any criminal issues, so I suspect that the US Attorney, FBI or others may still be looking into this case and (my opinion here) it might hinge on what Dan does next.  For example, if Dan were to “man up” and quit his radio show where he is still huffing and puffing about his wisdom…he might avoid more consequences.  On the other hand…should he stay on the radio and continue his advice (although who would want to listen)…then there might be more interest in criminal charges.

My guess is that if there are enough folks who have been harmed by the talented Mr. Frishberg who complain to the US Attorney or FBI, perhaps law enforcement will find the wisdom and logic to continue to investigate Dan Frishberg and extract consequences more fitting with his crime (that he did not admit).

PUBLICITY

One thing that Dan Frishberg liked is publicity…in fact, it seemed he craved it.  Well, he’s getting what he liked as he’s being reported on in the Wall Street Journal and other major news outlets.  Wonder, and I’ve got to ask, if Maria Bartiromo is going to interview Dan “The Money Man” again…or if she has finally figured out that is was all smoke and mirrors?

WANT YOUR VOICE HEARD?

If you feel that your voice needs to be heard here are two US Attorney’s that could be contacted – one in the Southern District of Texas (Houston Area) and one in the Northern (Dallas).  I suspect the Houston US Attorney is the one who would have the most interest, but since the SEC in Fort Worth brought the charges…I’m providing both.

José Angel Moreno, US Attorney Houston
P.O. Box 61129
Houston, TX 77208
(713)567-9000

James T. Jacks, US Attorney Dallas
1100 Commerce Street, Third Floor
Dallas, TX 75242-1699
(214)659-8600

SHARE YOUR VOICE –

WHAT DO YOU THINK ABOUT THIS SEC OUTCOME?


Ignored by Maria Bartiromo and the main stream media at CNBC related to the BizRadio – Dan Frishberg interview request – Why?

May 20, 2010

First, I’m a fan of Maria Bartiromo and respect the body of work that she’s done.  Out of that respect I contacted Ms. Bartiromo (Maria) to see if she would be willing to talk with me about the process by which guests are selected for CNBC’s Closing Bell and what happens when you find out that a guest – in this case Daniel Frishberg – is the subject of an investigation by the SEC?

Now…I am smart enough to recognize that I am not part of the main stream media, in fact, many feel that the new world of the blog and “in-home journalist” is not a legitimate media outlet and has no real value in the market place.  I disagree.  Reality is, those home grown journalists, are becoming vital when it comes to breaking stories that have yet to catch the media eye.  In the case of BizRadio and Daniel Frishberg, I first became aware of the issues from a friend in Houston and a story reported on in the Houston Chronicle.  The story was factual and spot on, but most who are active in reading this blog series would say that they have gained more information from my efforts than they have been exposed to in the Houston Chronicle.

The point?  What is reported on here does have value and many have shared that the questions posed are worthwhile and deserve answers.  To that end, I sought a brief interview with Maria Bartiromo so that some of the questions could be explored.  Here’s the body of emails that were sent and responses received so that, to the reader, it can be clear that I was not on a mission to discredit Ms. Bartiromo, but rather, to explore what happens when a former guest becomes somehow publicly discredited through his own actions.  See the emails below and then we’ll follow up with more questions:

Ms. Bartiromo,

It is with respect that I ask you for an interview.  I am an international speaker and author on business ethics and fraud prevention and write an active blog on the same.

I have been following – for some time – the escapades of Dan Frishberg, Al Kaleta and BizRadio.  I am aware that from time to time he has been a guest on your show and likewise has been interviewed by Tracy Byrnes on Fox.

Now that he is actively under investigation by the SEC and US Attorney’s office for fraud, I would like to discuss with you the impact that this might have on his past interviews.  There are several questions that arise and I feel your perspective would be helpful.

As a form of introduction here is a recent entry that frames the allegations against Mr. Frishberg.  These were heard in District court with a decision likely to follow another hearing on June 10, 2010.  Meanwhile, the allegations are being made by the Receiver appointed from the SEC investigation against Al Kaleta – Frishberg’s right hand man – and now are spilling into Frishberg’s domain.

https://chuckgallagher.wordpress.com/2010/05/06/bizradio-is-dead-frishberg-kaleta-et-al-effectively-accused-of-fraud-prediction-criminal-prosecution-to-follow/

I am interested in the vetting process that CNBC uses to attract guests and what happens when one fails that process.  My request to talk is in no way an attack on you or CNBC.  Rather, I respect your professional opinion and would like to know, when something like this happens – what’s next from a major media perspective?

I am hopeful that you will consider my request and help me with my interview.

Respectfully yours…
Chuck Gallagher
www.chuckgallagher.com
828.244.1400

—– Forwarded Message —-
From: CNBC Customer Care Team <customercare@support.cnbc.com>
To: chuck@chuckgallagher.com
Sent: Thu, May 13, 2010 2:10:09 PM
Subject: Re: Closing Bell [#454864]
Dear Chuck,

Thank you for your submission to the CNBC Customer Care Team.

We do not provide specific contact details of our CNBC Employees. We would suggest you email the respective show directly. A list of show email addresses is provided at the end of this email.

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–Original Message–
From: chuck@chuckgallagher.com
Date: 5/11/2010 2:17:28 PM
To: customercare@support.cnbc.com
Subject: Closing Bell

First Name: Chuck
Last Name: Gallagher
I respectfully request contact with Maria Bartiromo regarding a story I am doing on Dan Frishberg “The Money Man” related to a government investigation into BizRadio. Ms. Bartiromo has interviewed him many times and I would like to talk with her regarding her perspective related to the investigation. I can be reached at 828.244.1400 or chuck@chuckgallagher.com

In addition to the above email stream, I also sent Maria Bartiromo an email directly to maria@wsjreport .com.  Response to all email requests?  Deafening silence!

OK – I’m a pretty practical guy and I know at the outset that this was a shot in the dark, but if you don’t ask you will never receive.  For that matter, I have on several occasions ask Dan Frishberg for an interview and, of course, the response – that same deafening silence.

So let’s approach this another way.  Perhaps it’s best to be public with the request and questions that I would love to ask Ms. Bartiromo.  Do I expect a response – you know – maybe.  Maybe if she has the opportunity to see what I question and thereby formulate her answers, she will extend the professional courtesy of a response.  Maybe!

On February 13, 2009 Dan Frishberg was featured along with another gentleman in an interview that Maria was a part of.  The interview is on YouTube here.  Likewise, only 9 days earlier, Maria had Daniel Frishberg on as a guest on CNBC’s Closing Bell – the interview is here.

In both cases, it has been reported by BizRadio insiders that Daniel and (perhaps) Elisea Frishberg made their way first class to NY for the interviews, staying in lavish hotels, all at the expense of BizRadio.  This was done in a time when, by all accounts, BizRadio did not have an income stream to support the travel and lifestyle of the Frishberg’s.  In fact, most insiders now report that this was all part of the massive BizRadio illusion – appear larger than life, be featured on National TV shows, and hope that you can grow your business to profitability.  Unfortunately a house of cards, built on investor funds that have been called frauduletnly obtained, are destined to collapse.

Fast forward to February 13, 2010 – a year later – we see the collapse was practically complete.  Daniel Frishberg was under investigation by the SEC, DFFS had transferred the RIA to Barrington Financial Associates, Al Kaleta (Daniel Frishberg’s partner in crime) was busted by the SEC, an SEC Receiver was appointed, and Daniel Frishberg was struggling to keep his show alive – experiencing blackouts of his broadcast cause he couldn’t pay the bills.

QUESTIONS FOR MARIA BARTIROMO

  1. When a guest like Daniel Frishberg is selected to be featured on shows like – Closing Bell – what is the vetting process going in that determines the persons validity?
  2. When was the last time Daniel Frishberg appeared on CNBC’s Closing Bell?
  3. Are you aware (or were you aware) before my request for an interview that Daniel Frishberg was the subject of an SEC investigation (and unconfirmed potential criminal investigation)?
  4. If yes, when did you (when I say you I mean CNBC) become aware of Daniel’s problems?
  5. When you discover that a guest (or former guest) is the subject of an investigation related to financial matters (SEC in this case), do you (or CNBC) do your own investigation in order to report activity of this guest/former guest?
  6. Is Dan Frishberg and/or Al Kaleta the potential subject of CNBC’s show – American Greed?
  7. Lastly, if you do not investigate former guests like Dan Frishberg from BizRadio, do you see his actions coming to light having any negative impact on your journalistic reporting or credibility?

Will my questions receive a response?  What do you think?  I’d love to receive your comments.

By the way – to be fair – I also tried to contact Tracy Byrnes on Fox.  The outcome – that same deafening silence.  Although, in Ms. Byrnes case my attempts were through Twitter and other less direct methods (methods other than a direct email contact).

Let’s hope that two things come as a result of this blog:  (1) both Maria and Tracy find a willingness to help shed some light on the vetting process for guests and, more importantly, what happens when it is discovered that a guest has run a foul of the SEC or other financial or criminal investigative agencies; and (2) both Maria and Tracy help us understand the position that CNBC and Fox take on investigating Daniel Frishberg.

I truly hope that my interview attempts were ignored, not by intent, but rather by other factors that just delayed their time and attention.  And, if that were true, then perhaps – just perhaps – both Maria and Tracy would consider responding, as I’m sure from the contacts I’ve made, folks are interested in what happens now when it comes to future interviews.

AS ALWAYS – YOUR COMMENTS WELCOME!