The SEC announced it has settled charges against Michael Seabolt, a financial advisor from Wellington, Florida. Seabolt was accused of selling PIWM, a Ponzi scheme operated by Nikolai Battoo.
Unfortunately, there is no celebrating in our office today. The SEC settlement did not require any admission of guilt or wrongdoing. Seabolt must pay $426,000 as part of the agreement and is barred from the securities industry.
For investors, there is little to celebrate. PIWM mastermind Nikolai Battoo continues to live the high life in Switzerland. The SEC obtained a $358 million disgorgement order against him yet he hasn’t paid a penny. The rumored number two PIWM kingpin, Tracy Sunderlage, continues to fight the SEC but has already told the court he is destitute and needs a lawyer at taxpayer’s expense.
Unfortunately, Congress did not give the SEC the power to criminally prosecute thieves, swindlers and Ponzi scheme artists. They can do little more than issue cease and desist orders and go to court seeking fines and orders banning fraudsters from the industry. As noted above, however, Nikolai Battoo has been ordered to pay hundreds of millions but hasn’t paid. Tracy Sunderlage, although fighting the current charges, was already barred from the industry in 1986!
For these reasons, we just don’t get excited when the SEC announces a $426,000 penalty and industry bar. We understand that all defendants are innocent until proven guilty but we would rather see Sunderlage, Battoo and Seabolt doing the perp walk on the 6:00 news; all in handcuffs and headed for arraignment on criminal charges. If investors aren’t going to get back their money, at least let justice take the form of a criminal trial where the entire story can be told and a jury can separate the guilty from the innocent.
Although Seabolt admitted no guilt, the SEC claims that from 2004 until PIWM’s collapse in 2012, he was the company’s U.S. sales rep. Our own investigation reveals that Seabolt didn’t directly sell PIWM investments, rather he recruited others to sell it.
Maybe he didn’t know that PIWM was a scam when he began hawking the scheme but the SEC says that by 2008, he knew much of the PIWM assets had gone to Bernie Madoff or were invested in a failed derivative scheme. Instead of coming clean or going to the SEC, however, Seabolt kept right on hawking PIWM.
Worse, the SEC believes that he helped distribute false statements and earnings reports.
Prior to joining PIWM’s “Professional Executive Board,” Seabolt was affiliated with Sovereign International Asset Management, another failed enterprise mired in allegations of fraud.
There is a ray of hope for some investors. Those that purchased PIWM through a stockbroker, insurance agent or other financial professional may be able to get their money back. Financial professionals have an obligation to perform due diligence on the investments they recommend and insure they are suitable for their customers needs. PIWM had plenty of red flags – warnings that professionals should have heeded.
PIWM was sold under many different names and by many brokers and insurance agents. We know it was sold by stockbrokers affiliated with NFP Advisor Services (NFP) and J.P. Turner. Sources tell us PIWM and its derivatives may also have been sold by Allan J. White & Associates, Barry Butcher & Associates, Sunrise Accounting LLC, Regency Health & Financial Insurance Services, Inwest Insurance, Mass Mutual Financial Advisors and Rick Rovedatti & Associates. (The latter group of names was supplied in discovery from another case and purports to be a list of companies who have advisors with clients in these investments. There is no indication that representatives of these companies marketed the PIWM products, however.)
Federal and state laws give investors a limited period of time to sue. Even if you purchased PIWM years ago, however, you may still be able to collect if you recently learned that your money was lost in a Ponzi scheme or fraud.
MahanyLaw – America’s Fraud Lawyers