Recently filed criminal charges reinforce the notion that investors ask pertinent questions before investing and scrutinize the broker and representations regarding an investment. In this recent case, the U.S. Attorney’s Office for the Southern District of New York filed securities fraud charges against an unregistered advisor.
The defendant, who allegedly went by the alias Dr. Terrence Cash, was charged with defrauding over $4 million from investors by offering and selling investments in a fictitious investment fund.
Multiple charges filed
In a criminal complaint filed on Nov. 3, the U.S. Attorney claimed that the defendant committed securities and wire fraud in a scheme to fraudulently encourage individuals to invest in his wealth management business under false pretenses. The scheme also involved using this alias to hide his criminal history.
From 2017 through Oct. 2020, the defendant allegedly sold clients an equity stake in a fund that would supposedly invest in companies and generate returns. But, according to the authorities, these representations were false and the promised investments were never made.
He was charged with using investor funds to pay personal and business expenses. These allegedly included apparent payments of approximately $1.7 million for personal credit card bills, $17,000 for NBA season ticket payments, approximately $22,600 to a prison inmate, about $30,000 for jewelry purchases and approximately $74,000 in BMW luxury car payments.
He apparently resided in Passaic, New Jersey and Orlando, Florida. He was arrested and arraigned in Orlando.
Previous conviction
The defendant was previously convicted of identity theft and conspiring to make false statements in August 2009. These crimes involved a scheme to fraudulently obtain loans and lines of credit in the names of entities that he controlled. He was charged with applying for loans using a dead relative’s identifiers. While he was incarcerated on that charge, he directed the submission of fraudulent documents to a vehicle dealership after his arrest to get BMWs for his associates.
The Securities and Exchange Commission filed another complaint on Nov. 3 in Orlando. The SEC charged that the defendant and other charged entities that he controlled raised approximately $5 million for the same fictitious fund and misappropriated large sums from that fund instead of investing them.
The defendant allegedly used $700,000 to pay his personal expenses. To continue the fraud, according to the SEC, the defendant also used $1.8 million of investor funds in a Ponzi-type scheme to make purported dividend payments to earlier investors.
Whenever a financial advisor represents that an investment is “unique” or only sold to certain “special investors” and offers above average market returns, your antenna should go up. you should ask probing questions about exactly what type of investments are involved, the broker’s track record and work experience and back ground and the basis for the expected “returns”. The old adage that “if it sounds too good to be true it often is” applies. If you think that you have been victimized by such conduct you should contact a seasoned securities litigator with a proven and consistent record of achieving real results.