Dan Frishberg apparently in violation of SEC order not to offer Investment Advice. Will there ever be Justice in this case?

November 6, 2012

Hello everyone Dan, here. How often do you hear yourself saying “no I haven’t looked at that yet, but I’ve been meaning to?”

Thus began an email written to my by none other than Dan Frishberg.  Yes, Dan Frishberg of disgraced BizRadio fame, the same Dan Frishberg that is banned from the SEC in offering investment advice…not that it seems the SEC has any teeth when it comes to Dan and his continued radio commentary.

I just read yet another email from a frustrated trader telling me that the trading techniques, the pattern recognition software, or the black box strategies that he believed in are simply not working.

Wow…again I’m confused.  You received “yet another email from a frustrated trader” – but Dan you’re not supposed to be offering investment advice so why would you be receiving any emails from traders?  What am I missing here?

Brokers are telling their customers to ignore their losses and hang on, but that’s what they always say. Sometimes that advice works, but it has also resulted in some of the biggest losses in the past twenty years.

Oh my…”some of the biggest losses in the past twenty years” – wonder if that isn’t exactly what happened to people – good folks who couldn’t afford to lose – when they listened to your line about BizRadio and why they should invest in you.  Dan tell me – if they lost in you, why should they now listen to you – especially when you’re not supposed to be offering investment advice?  Damn this perplexes me!

One listener said he has finally realized technical analysis doesn’t work. This isn’t true, the current price is unquestionably a key part of the story but this is only part of it.

Only part of the story…seems that’s a mantra for you.  Has anyone who invested with you in BizRadio ever gotten the truth – the full story or even as much as an apology?

The paradox of investing is – it’s easy to make money when you stop searching for the easy answer.

Yet you and Al Kaleta offered “easy answers” to investors who by all accounts were defrauded.  Have you made restitution?  Have you made it easy for them to recover their monies?

Instead, get an update on what’s working now — the most up to the minute insight into the trends, turning points, and my best stock and option trade ideas in my all new newsletter, Whats Working Now.

You do have a big set of (whatever)…get “my best stock and option trade ideas” – good lord is that not in direct violation of the SEC requirement that you not offer investment advice?  Justice?  Doesn’t seem to be any here!

CLICK HERE – (I disabled this link as I’m not giving Dan Frishberg a link from my blog)

DANIEL FRISHBERG
THE MONEYMAN REPORT
themoneyman.com

YOUR COMMENTS ARE WELCOME!


Venture Capitalist – Harvard H. Hill of Houston charged with Fraud!

August 3, 2011

NEWS RELEASE:

Harvard H. Hill, of Houston, has been charged with three counts of wire fraud in connection with an investment in the general partnership of a Houston-based venture capital fund he promoted.

Hill, 74, surrendered to FBI agents as a result of the return of the three-count indictment on July 21, 2011.

The indictment alleges that Hill defrauded an investor in the general partnership that managed the James Sunbelt Investment LP Fund that Hill promoted. Hill, who has operated venture capital funds in Houston under the name Houston Partners, solicited an investor to become a special limited partner in the general partnership. Under the supposed structure of the fund, the general partnership would receive 20% of the fund’s profit distributions and a 2% annual management fee. The special limited partner would receive a percentage of the general partnership’s stake, so the ability to repay the special limited partner depended in significant part on the amount invested in the fund given the annual 2% management fee.

The indictment alleges that Hill misrepresented that millions of dollars were already in the fund under the management of the general partnership, provided false information listing the names of companies in which the fund was supposedly invested and falsely claimed that professors at Rice and MD Anderson Cancer Center had agreed to serve on the fund’s Scientific Advisory Board. The indictment further alleges that within a week of the investor wiring $500,000 to Hill in July 2006, Hill had transferred over half the funds to a personal account in his name, a bank account controlled by a member of Hill’s family and an account in the name of another fund in which Hill had past due expenses. According to the indictment, within two months of receipt of the investment, more than 80% of the money had been spent and was not used for promoting and managing the fund.

Each wire fraud count carries a potential punishment of up to 20 years in prison and a $250,000 fine.

YOUR COMMENTS ARE WELCOME


Christopher Blackwell – indicted on Investment Fraud in Colleyville, Texas. Simple fraud will earn a painful consequence!

July 22, 2011

A classic stupid Ponzi scheme!  It has been said that a sucker is born every day, but I still find myself amazed that otherwise intelligent people would fall for something so blatantly stupid as what Blackwell offered to the fine folks in and around Colleyville, Texas.  As a business ethics and fraud prevention speaker and author, I know first hand about what goes on behind the scenes when such a fraud occurs and how folks fall prey to victimization by perpetrators like Blackwell.

Christopher Blackwell, 32, of Colleyville, Texas, has been indicted by a federal grand jury on two counts of wire fraud in relation to an investment fraud scheme he has operated since January 2007. Blackwell was arrested in Phoenix, Arizona, earlier this month. Blackwell remains in custody. A date has not yet been set for his arraignment in U.S. District Court in Fort Worth.

According to the indictment, Blackwell allegedly deceived investors by falsely telling them that he would invest their money in business ventures that would generate a high rate of return, and by fraudulently assuring them that the investments would involve little to no risk. He told investors that their money would be invested in specific business ventures, but when he received investors’ money, he didn’t invest it and instead used most of it for his own personal benefit. On occasion, he would use some of the funds from new investors to make small payments to earlier investors to convince them that their money was generating a profit. However, not all investors received payments from Blackwell and many lost all of the money they invested.

According to the criminal complaint filed in the case, more than 20 victims, suffering more than $4 million in losses as a result of Blackwell’s scheme, have been identified. One investor, identified only by initials, lost all of the $325,000 he gave Blackwell to invest. In fact, after this investor wired the money as directed to Blackwell’s accounts, agents obtained Blackwell’s bank records and were able to determine that Blackwell didn’t invest the money as promised, but instead used it for personal expenditures including automatic teller machine withdrawals, dining and entertainment, luxury vehicle expenses and payments to family and business associates.

In February 2011, the U.S. Securities and Exchange Commission (SEC) filed a complaint against Christopher Love Blackwell, AV Bar Reg, Inc. and Millers A Game, LLC, two entities he controls, claiming that Blackwell enticed investors by telling them that his trading program would generate highly impressive, guaranteed returns of 25 to 30 percent per month with regularity. He falsely claimed these profits were possible because of his academic pedigree, including Master’s and Ph.D. degrees acquired at a prestigious university in Spain (Blackwell holds no such degrees); his extensive experience as a trader (he has little, if any, such experience); and the know-how and connections he acquired while employed by Goldman Sachs and The Bank of Madrid (he never worked at either firm). In March 2011, the SEC and Blackwell and his entities entered into an agreed judgment.

25 to 30 percent per month with regularity?  Really, in this economy people would believe that?  Whatever happened to due diligence?

An indictment is an accusation by a federal grand jury, and a defendant is entitled to the presumption of innocence unless proven guilty. If convicted, however, each of the wire fraud counts carries a maximum statutory sentence of 20 years in prison and a $250,000 fine. Restitution could be ordered.

If you were a victim of this Ponzi Scheme…perhaps you’d comment on the lure Blackwell used to secure your investment.

YOUR COMMENTS ARE WELCOME!


John Wiley Price – Innocent till proven Guilty or a Crook whose been nabbed by the FBI? Is there a Sprint to Judgment by the Media?

July 4, 2011

So far no one has been accused of any crimes!  You couldn’t tell it however from the media hype which most certainly will have racial overtones in this Dallas story.  So…some may ask why deal with it here – is this an ethics issue?  Good question and yes, but not perhaps for the reasons you might think.  The question I have relate to the ethics of sensationalism when no one has been accused of anything…at least not yet.

Not one to shy away from controversy…John Wiley Price will take on a fight and tell it like he sees it.  Example…in the following video Price says, “All of you are white; go to hell.”  Guess there’s a bit of a discriminatory feeling on his part.

But Mr. Price’s ethnic inclinations and hateful words are not what is driving the media today.  According to a report by Brett Shipp, “…at least six federal agents made their way inside the Millenium 2000 Gallery, where they stayed most of the day searching for records, taking photographs and looking for evidence of a crime.”  Shipp’s entire report can be seen here.

His report goes on to say:

Over the past four years, Price has used his campaign funds to purchase $46,000 in gifts and services from Manning.

Among the gifts was a $2,150 Kwanzaa gift for indicted former Constable Jaime Cortes, a $1,200 gift for mega-church pastor Ricky Rush and $2,525 in gifts for an unnamed constituents.

Among the services were campaign vehicle repairs, one of which was for $300 and another for $700 and $1,800 for vehicle wrap art.

The FBI won’t say exactly what they are looking for in Manning’s store and there is no indication that such gifts were improper.

WHAT’S ALL THE FUSS ABOUT?

With all that said and no charges filed…what’s all the fuss about?  I mean from my vantage point it seems much ado about nothing.  But, the buzz of FBI officers looking is enough to create attention…just ask Patrick Williams the author of another story on Mr. Price.

Entitled: John Wiley Price: Give the Devil His Due – Williams states:

Expect a lot of quote-trolling, thumbsucking and rumor-mongering in the weeks ahead, as hungry reporters scramble for crumbs of hard information. Nature abhors vacuums, and the 24-hour blogosphere hates them too. And since FBI agents aren’t the chattiest bunch—the local field office has a Tumblr called “We’re Not Saying Shit”—it’s going to be speculation city for a while. Did Price’s collection of questionably attained vintage cars stir the feds? Was it KwanzaaFest, Price’s charity event? What about the inland port, that transport hub Price attempted to jack? WFAA reported that Price has bought a lot of real estate lately. Ah-ha! What sort of person buys cheap real estate in a down market?

QUESTION:  Is there a Sprint to Judgment by the media in this case much like the in the Strauss-Kahn case or is there truly a smoking gun behind the actions of the FBI?

YOUR COMMENTS ARE WELCOME!


Brion Gary Randall facing prison for Financial Crimes… Choices and Consequences: Comments by Business Ethics and Fraud Prevention Speaker Chuck Gallagher

May 10, 2010

A Plano, Texas, man, who has admitted running a fraudulent investment scheme from 2004 through July 2009, will enter his guilty plea before U.S. Magistrate Judge Paul D. Stickney on May 18, 2010, to felony offenses related to that crime, announced U.S. Attorney James T. Jacks of the Northern District of Texas. Brion Gary Randall, 48, has signed documents, filed with the Court, pleading guilty to an Information charging one count of mail fraud and one count of bank fraud. Each count carries a maximum statutory sentence of 30 years in prison and a $1 million fine.

According to filed plea documents, Randall worked as an investment advisor from 2004 through July 2009. During part of that time, he operated, and owned in part, 2Randall Consulting Group, LLP and also owned part of Titan Home Theater, LLC, which designed and installed commercial and residential audio/visual systems. According to a complaint filed by the U.S. Securities and Exchange Commission against Randall and 2Randall in August 2009, the Financial Industry Regulatory Authority (FINRA) suspended and fined Randall for improperly exercising discretion in customer accounts without prior written permission. That case is currently pending.

From 2004 through July 2009, Randall raised more than $6 million from 30 investors through a scheme in which he caused persons to invest in a number of short-term loan participation programs, which in fact, did not exist. He used investors’ funds for his own benefit and not for purposes he represented.

For example, Randall represented that he was pooling money in accounts at Chase Bank and AllianceBernstein for investment in a variety of short-term loan participation programs. Randall represented that an investor’s money in 2Randall Consulting’s account at Alliance and Chase was held in a non-taxable escrow account and fully liquid, with the investor able to withdraw his money at any time. He represented that the 2Randall consulting account at AllianceBernstein had a balance ranging from $25 million to $29 million, and that he had also invested millions of dollars of his own money into the accounts.

In reality, however, the Chase Bank and AllianceBernstein accounts were nonexistent. To further the scheme, Randall created and distributed fraudulent documents to investors, including bogus Chase Bank and AllianceBernstein account statements. He also created bogus 2Randall Consulting accounting statements and portfolio summaries. In meetings with some investors, he would display a false and fictitious computer screen shot of either the Chase Bank or AllianceBernstein account which would show the investor’s money on deposit.

Randall also represented to investors that they could invest in short-term loan participations, usually lasting 45 to 90 days and returning a high rate of interest. He sold loan participation programs in 1) Small Business Administration (SBA) loans; 2) Titan Home Theater project completion loans; and 3) loans to acquire real estate in Galveston, Texas.

For the SBA loans, Randall falsely represented to investors that they could participate with 2Randall Consulting in a short-term loan to a local company seeking an SBA loan. Randall represented that the short-term loan would provide sufficient capital to enable the company to obtain the loan at a discounted rate, and once the SBA loan closed, the company would return to 2Randall Consulting and the participating investors the principal plus 10 percent. He represented that the companies receiving the loans were reputable local businesses, including 84 Lumber, General Packaging Corporation, PerotSystems Vent-A-Hood and Richardson Bike Mart, businesses where Randall’s father had an established relationship. Randall represented that participating in an SBA loan participation program was low risk and that an investor could only lose his money if the company declared bankruptcy during the 45-90 day term of the loan. Randall knew that no such SBA loan participation agreements existed.

With regard to the Titan Home Theater project completion loans, Randall represented that investors could participate in short-term loans to Titan enabling it to complete a number of commercial projects, and that upon completion of the projects, Titan would return the principal plus up to a 22% return. Randall falsely represented that Titan was a subcontractor on several commercial projects including projects at Southern Methodist University, the Bush Library and the Dallas Cowboys stadium.

Randall also represented to investors that they could participate in short-term loans enabling him to finalize the acquisition and sale of real estate in Galveston. Randall promised that on closing, he would return the investor’s principal plus a sizeable rate of interest.

As a further part of his fraud, Randall obtained loans from financial institutions by submitting forged signatures and false and fraudulent documents. The plea documents note that Randall obtained five loans, from Bank of America, Texas Capital Bank and Wells Fargo, that all defaulted, causing a total loss to these financial institutions of nearly $875,000.

COMMENTS:

The question that I often get asked in seminars I conduct is: How can someone with reasonable intelligence get caught up in such a scam?  Answer: They get caught up in the PIT.

“P” – PROMISE – The first step to falling into a scam (especially a financial scam) is the “promise”!

“I” – The second part of falling into the scam is the – ILLUSION!

“T” – In the PIT the third and last component is TRUST.

Combine the three components and you find victim investors falling into the “PIT” as I call it.  When some one promises a 22% return – that PROMISE in and of itself is a warning sign that something is amiss!  It almost makes no difference what else might take place, the unreasonable promise of a return is a clear indication that you might be a fraud victim.  Funny, however, it seems the more focused someone is on getting something that most people can’t have the greater likelihood they will fall prey to a scam artist.

Every choice has a consequence and in this case Randall will have a long time to think about his fraud and the impact it has and will have on his life and the lives of countless others.

If you’re a victim of Randall’s fraud, I’d appreciate your comments on what took place that got you hooked.  Perhaps your comments will help others avoid the consequences of the PIT!

YOUR COMMENTS ARE WELCOME!


99 Years in Prison for investor fraud Ponzi Scheme. Texas convicts Edward S. Digges Jr. Better watch out if you defraud folks in Texas is the message!

February 22, 2010

Well…I’ve been writing about a lot of, what seem to be, Texas investor shenanigans and then I see that a Texas District Court and jury find that they’ve had enough.  I suppose we could all agree that a 99 year prison sentence does seem to send that message.

Edward S. Digges Jr. was sentenced last week to 99 years in state prison for orchestrating a multistate, fraudulent investment scheme that involved the lease of credit card and debit card terminals.

The jury’s sentence came after a four-week trial that resulted in the Feb. 4 conviction of Digges for aggregated securities fraud. The Texas State Securities Board and the Collin County district attorney’s office prosecuted Digges, a former Maryland lawyer who was convicted of federal mail fraud in 1990.

I have to say that some folks do not learn.  That is unfortunate as EVERY CHOICE HAS A CONSEQUENCE.  It seems that as humans we might take the wrong path and pay the price, but if we take that same path again…the price GETS BIGGER.  Digges, now some 20 years later, is finding out just how significant the consequence is of his actions.  Just he picked on the wrong state.  They say things are bigger in Texas…and having lived there…it does seem to be true.  In this case I know it’s true!

Digges controlled an entity called the Millennium Terminal Investment Program. It offered securities that were purportedly based on the revenue generated by point-of-sale terminals that merchants use to process credit and debit transactions. Digges raised at least $10 million from about 130 Texas investors, the majority of whom were elderly.

“Edward Digges has a long history of defrauding some of our most vulnerable citizens, and this sentence ensures he will never again do so,” Texas Securities Commissioner Denise Voigt Crawford said. “The conviction will not return money to investors, however. This case highlights the importance of checking the background of any financial professional you choose to do business with, and the importance of obtaining full disclosure before investing.”

To attract Texas investors, Digges employed a sales force made up largely of insurance agents. Investors were told they would receive a monthly payment of $50 for each terminal they purchased – equivalent to a 12% annual return. Millennium also said investors could sell the terminals back to the company after five years, recouping their initial investment in the equipment and the 12% annual returns for five years. The company said it had established a reserve fund to ensure these payments to investors.

HOW TO CREATE AND SPOT A FRAUD…  When an investment adviser promises something that isn’t real and seems too good to be true – like a 12% annual return – then run for the hills cause there is likely a fraud taking place.  This reminds me of the series of articles that I’ve written about BizRadio and Daniel Frishberg.  While there is no accusation of fraud, there sure seem to be similarities.  Investors promised something that they now find, not only didn’t happen but can’t happen.   See articles here and here.  The PROMISE of something extraordinary is the first part of a scam in the works.

According to evidence presented in the case, no such reserve fund existed, and the Millennium program was in financial turmoil. The terminals were not producing enough revenue to pay investors, and the program operated at a loss from the start – a fact concealed from investors. The majority of lease payments made to investors came from other investors, not from money generated by placement of the terminals. Company principals also used investors’ money to pay their personal expenses.

Digges also concealed his background and the degree of control he exercised over Millennium. He failed to disclose he spent two years in federal prison following his mail fraud conviction in 1990; the conviction stemmed from a scheme to overbill clients at his law firm. Nor did Digges tell investors that he had a civil judgment against him for $3.6 million in a suit related to the overbilling scheme.

In addition, Digges has a long list of federal and state regulatory sanctions imposed against him for selling investments in the Millennium program. The Texas State Securities Board began investigating Digges in mid-2005 after newspaper advertisements for the Millennium program appeared in newspapers marketed to senior citizens.

Now don’t take this the wrong way, but 99 years for a $10 million scam – well, I wouldn’t want to be a white-collar criminal in Texas.

SPOTTING A FRAUD:  This Ponzi scheme, just like all the rest, have a foundation of three things:  PROMISE, ILLUSION and TRUST.  If a person (generally a TRUSTED person) PROMISES you something that most people wish they could get (a great INVESTMENT return) and support the whole idea by an ILLUSION (fake statements – flashy lifestyle – media hype, etc.) then you have all the makings for a FRAUD.  If you’ve invested in such a “thing” you’ve likely invested in a FRAUD.  You, as I put it, fell into the PIT.

The only hope for investor relief is found in IRC Section 165.  There’s an article that I wrote here about that for folks who seek to find some way to get some of their lost investment back.  Check out the article.

YOUR COMMENTS ARE WELCOME.


Jimmy Choo shoes and Million Dollar Home – Chad Read and Emily Read now sentenced to Federal Prison!

January 5, 2010

From California to Lubbock, Texas – Chad and Emily Read lived a modest life.  Then Emily began working for Reaction Fitness Clubs (a modest health club chain) – and things changed.

From living with Emily’s mother to owning a series of large homes and a condo in Dallas, the Reads had a dramatic change in lifestyle.  From a $1.2 million home, to expensive cars, to a recreational vehicle, to designer clothes and Jimmy Choo shoes – the Reads enjoyed life in a way few experience.  But where did the money come from?  According to the Reads their new found wealth came from a trust fund her father left to her.  Reality…well there was no trust fund only embezzlement or theft!

Seems that Emily worked as a bookeeper for the fitness clubs referred to as the Reaction Fitness Clubs.  During that time she wrote a large number of checks from the club and either would cash the checks or deposit them into their personal accounts.  Likewise, they used funds from the club accounts to pay for their personal credit cards and purchase other luxury items.

EVERY CHOICE HAS A CONSEQUENCE!

Emily J. Read – now Chad Read’s ex-wife – was sentenced in September 2009 to 41 months in federal prison and ordered to pay more than $670,000 in restitution.

Chad Read was sentenced in December 2009 to 18 months in federal prison and ordered to pay restitution remaining of $15,000.

WHAT HAPPENED?

Obviously, both husband and wife were convicted and sentenced.  But, since Chad received a substantially lower sentence (in terms of time spent in prison), was it possible that he was not fully aware of the crime being committed by his (now) ex-wife?  And, what motivated Emily to change her former lifestyle and enter into an obvious life of crime?  Lastly, how was she so easily able to effect the crime?

There are three components of a white collar crime – NEED – OPPORTUNITY and RATIONALIZATION.  In this case, it is clear that Reaction Fitness Clubs did not have sufficient internal controls opening the door to “opportunity”.  Seems that Read had free reign and, management must have been asleep at the wheel in order for a fraud of this magnitude to have gone undetected for so long.

LESSON

To avoid fraud you either have to have someone so strong in their ethical beliefs or foundation that they won’t cross the line or you have to eliminate one of the three components – and in this case the easiest way to have avoided this disastrous consequence would have been the elimination of opportunity.  Any good CPA or business owner knows that internal controls are there to protect the business assets and preclude the likelihood of succumbing to temptation.

I can’t address the Read’s need or rationalization, but had sufficient controls been put in place, Emily would not have easily had the opportunity to effect her massive life changing fraud.

Your comments are welcome!