by Brian Mahany
The title of this post sounds rather boring – unless you are one of the tens of thousands of Americans burned by private placement scams. Ponzi schemes and fraud have been with us since the beginning of time. As much as we stress prevention and due diligence on this website, unfortunately bad people will continue to victimize good people.
Many of the scams out there are promoted directly by the fraudsters. These are tough from an asset recovery standpoint since the money is often long gone by the time we get the call. Purchasing from a stockbroker gives us (and therefore you) an additional deep pocket to pursue.
Theoretically, brokers shouldn’t be the subject of many private placement abuses and Ponzi scheme lawsuits. Because they are financial professionals, they have the training to ferret out bad investment deals. As licensed securities dealers, they also have a legal obligation to perform some due diligence before recommending these “deals” to clients.
Unfortunately, many of these brokers are more interested in profit and leave the due diligence to a third party, or worse, rely on the promoter (fraudster) for the due diligence research!
Recently, the Financial Industry Regulatory Authority (FINRA) took action against several brokerage firms. Last week FINRA announced sanctions against Securities America, Next Financial Group, Equity Services Inc, National Securities Corp., Newbridge Securities, Garden State Securities, Capital Financial Services and Investors Capital Corp. FINRA says these firms sold tens of millions of dollars in private placements in Medical Capital Holdings and Provident Royalties. Both companies were scams according to the SEC.
Not only are these firms responsible for the fines, they may be responsible for the losses suffered by their clients. (The Provident and Med Cap losses were so high that several brokerage firms that sold these investments have gone out of business.)
If you lose money on a private placement or any other type of investment, time is critical in seeking recovery. Even if you purchased from a broker, don’t waste any time. The longer you wait the less assets may be available for recovery.
If you are the victim of an investment fraud, call us. Our stockbroker fraud and asset recovery lawyers have helped many people get back their hard earned money. Want more information? Contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan & Portland, Maine. Services available nationwide.