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Oct 12, 2022 by |

Los Angeles Financial Elder Abuse Attorneys: SEC Charges Investment Advisor For Ponzi Scheme

ATTORNEY NEWSLETTER

Accused Of Misappropriating Millions

Seniors Among Victims

Money Allegedly Spent At Porsche Dealership And On Rent

With inflation surging, retired Americans are understandably concerned about how their fixed incomes will cover future expenses. Dishonest financial advisors and brokers capitalize on this anxiety to offer investment “opportunities” paying higher rates of interest.  Such “opportunities” may be risky, unregistered investments or completely fraudulent.  Sometimes, the investment a part of a Ponzi scheme, where money collected from new investors is used to pay existing investors, and there really is no actual investment of funds at all.  Unregistered investments sold to unqualified investors or fraudulent Ponzi schemes violate securities laws (see, e.g, Rule 10b-5 of the Securities Exchange Act, 17 C.F.R. 240.10b-5).  When the victims are seniors, fraudulent schemes constitute the additional crime of financial elder abuse and are grounds for the recovery of enhanced civil damages including awards of attorneys’ fees and expenses for the cost of bringing suit against all wrongdoers, including anyone assisting them.  See Penal Code § 368 (crime of financial elder abuse) and Cal. Welf. & Inst. Code § 15610.30 (definition of financial elder abuse).   Evans Law Firm, Inc. can represent you if you lose money as a result of financial elder abuse in Los Angeles or throughout California.  If you have, call our lawyers today at (415)441-8669.  Our toll-free number is 1-888-50EVANS (888-503-8267).

SEC Charges Advisor With Running Alleged Ponzi Scheme[1]

In a recently reported case, the U.S. Securities and Exchange Commission (SEC) has charged a financial advisor with two fraudulent securities offerings. The SEC alleges that the advisor, a former guest commentator on CNBC, raised more than $5.1 million from 23 investors, many of whom were over age 65, and misappropriated more than $2.9 million of those funds for personal expenses and Ponzi-like payments to earlier investors.  The SEC’s complaint also alleges that the advisor raised another $3.6 million from investors for the stated purpose of trading securities, and that he used less than half those funds for trading and did not engage in any trading with the funds for long stretches of time. Instead, the SEC alleges, McDonald misappropriated more than $1 million of the funds for personal expenses, including luxury vehicles and paying rent on his home, and misappropriated more than $2 million of the funds for Ponzi-like payments, payments to his investment adviser clients and expenses associated with operating with another advisory firm he ran. The SEC further alleges that the advisor lied about the firm’s financial condition, failed to disclose that he had promised one set of his clients that the firm would repay earlier losses, and commingled the investor funds with his personal assets, and used $440,000 of those funds for personal expenses, including to pay his personal credit card bills.

Warning Signs Of Fraudulent Investment Schemes

Before investing in any new venture, check for classic warning signs of a Ponzi scheme:

  • Promises of High Returns with Little or No Risk. Guaranteed high investment returns are the hallmark of a Ponzi scheme. Every investment has risk, and the potential for high returns usually comes with high risk. If it sounds too good to be true, it probably is.
  • Unlicensed and Unregistered Sellers. Most Ponzi schemes involve individuals or firms that are not licensed or registered. Even if an investment professional comes across as likeable or trustworthy, use the free search tool on gov to check whether the person is licensed and registered. Also do a broker check at BrokerCheck – Find a broker, investment or financial advisor (finra.org).
  • Overly Consistent Returns. Investment values tend to fluctuate over time. Be skeptical of an investment that generates steady positive returns regardless of market conditions. That was one of the hallmarks of Bernie’s Madoff’s huge Ponzi scheme.

Contact Us

If you or a loved one has been the victim of a Ponzi scheme or other form of financial elder abuse in Los Angeles or elsewhere in California contact Ingrid M. Evans at Evans Law Firm, Inc. at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Our toll-free number is 1-888-50EVANS (888-503-8267). 

[1] Evans Law Firm, Inc. is not involved in the case in any way.

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