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Tag: NASD

  • SEC: California Scammer Traded On Agency’s Name To Sanitize $60 Million Fraud And Ponzi Caper; John A. Geringer And GLR Capital Management Charged With Fraud Amid Allegations ‘Fund’ Claimed Handsome Return Before It Even Existed

    “Geringer painted the picture of a successful fund weathering America’s financial crisis through a diversified, conservative investment strategy. The reality, however, was the complete opposite. Geringer lost millions of dollars in the market, tied up remaining investor funds in a pair of illiquid private companies, and lied about it in phony account statements.” — Marc Fagel, director of the SEC’s San Francisco Regional Office, May 24, 2012

    A California investment adviser presiding for years over a $60 million fraud duped investors by making Ponzi payments and used the names of the Securities and Exchange Commission and the National Association of Securities Dealers to sanitize his scheme, the SEC charged.

    Named defendants in a fraud case filed in the Northern District of California were John A. Geringer, 47, of Scotts Valley, and his Scotts Valley-based companies: GLR Capital Management LLC; GLR Advisors LLC; and Geringer, Luck & Rode LLC. GLR Growth Fund L.P. of Scotts Valley was named a relief defendant amid allegations it received ill-gotten gains.

    The SEC said Geringer touted imaginary annual trading profits of between 17 and 25 percent to lure investors into his scam, describing the investigation as one that exposed internal inconsistencies. Fraud schemes are known for such inconsistencies.

    “Although the fund was started in 2003, marketing materials claimed 25 percent returns in 2001 and 2002 — before the fund even existed,” the SEC charged. “The marketing materials also falsely indicated a nearly 24 percent return in 2008 from investing mainly in publicly-traded securities, options, and commodities, while the S&P 500 Index lost 38.5 percent.”

    And Geringer “further lied” to investors when the claimed his venture was “MEMBER NASD SEC APPROVED,” the agency said.

    “The SEC does not ‘approve’ funds or investments in funds, nor was the fund (or any related entity) a member of the NASD (now called the Financial Industry Regulatory Authority — FINRA),” the SEC said.

    Geringer raised more than $60 million since 2005, mostly from investors in the Santa Cruz area, the SEC said.

    “To mask his fraud, Geringer paid millions of dollars in ‘returns’ to investors largely by using money received from newer investors,” the SEC said. “He also sent investors periodic account statements showing fictitious growth in their investments.”

     

  • BULLETIN: CFTC Moves Against Alleged Texas Forex Fraudster Christopher B. Cornett; Agency Says Huckster Is Convicted Felon Once Banned By NASD; 5 International Law-Enforcement Agencies Assisted In Probe

    BULLETIN: The CFTC has gone to federal court in Texas, alleging that Christopher B. Cornett of the town of Buda was operating a Forex- pool fraud and misappropriation scheme that gathered more than $14 million in phases between June 2008 and October 2011.

    Cornett has been charged civilly with fraud, which allegedly operated through entities the CFTC identified as ITLDU, ICM, International Forex Management LLC and/or IFM LLC.

    “[M]ost, if not all, of the profits, losses and account balances that Cornett reported to pool participants were false,” the CFTC said.

    Five international agencies, according to the CFTC, assisted in the probe: the U.K. Financial Services Authority, the British Virgin Islands Financial Services Commission, the Ontario Securities Commission, Germany’s BaFin, and the Swiss Financial Market Supervisory Authority.

    In 2003, according to the CFTC, the National Association of Securities Dealers (NASD) “barred [Cornett] with association with any NASD member in any capacity” and ordered Cornett to pay restitution in the amount of $28,423.73 for signing a customer’s name on the back of a check and using the funds for Cornett’s personal benefit without the authorization, knowledge or consent of the customer.”

    NASD was the predecessor agency of the Financial Industry Regulatory Authority (FINRA).

    Also in 2003, Cornett was sentenced to 37 months in federal prison after pleading guilty to five counts of bank fraud, the CFTC said.

    Read the CFTC complaint.

     

     

  • ILLINOIS MAN INDICTED: Edward L. Moskop Accused In Alleged Multmillion-Dollar Ripoff Of Elderly Couple, Friends, Relatives — And The Local VFW Post

    In a criminal case that flowed from an SEC civil action, an Illinois man has been indicted on mail-fraud and money-laundering charges in a case that alleges he stole from elderly clients and the local Veterans of Foreign Wars Post.

    Edward L. Moskop, 63, of Belleville, originally was charged in November 2010 by the SEC, which alleged he ripped off an 88-year-old man and the man’s 84-year old wife.  At the SEC’s behest, a federal judge issued an asset freeze while the probe moved forward.

    Federal prosecutors now say the scheme gathered at least $2.4 million over 20 years, with Moskop also ripping off friends, relatives, insurance clients, people referred to the scheme by attorneys and the VFW.

    Moskop was a recidivist, prosecutors and regulators say. Records show he was banned from associating with National Association of Securities Dealers (NASD) reps for ripping off clients more than 20 years ago. NASD was the predecessor agency to FINRA, the Financial Industry Regulatory Authority.

    Regardless, Moskop continued to do business with other people’s money.

    “Moskop had been barred from association with any member of the NASD and was no longer registered to act as a broker in the securities industry,” the FBI said. “It is alleged that from 1991 to 2010, Moskop persuaded customers to provide him with funds for investment, but instead of making the investment, he kept the funds for his own use.”

    Moskop called the elderly couple he was ripping off his “premium clients,” and he was “siphoning away” their wealth and giving them “forged” documents, the SEC charged last year.

    All in all, the SEC said, Moskop stole nearly $300,000 from the couple by making them believe they had accumulated nearly $600,000 in 16 different investments.

    For 20 years, the couple never cashed out any of their holdings, choosing instead to let their profits roll over and believing their money not only was safe, but also was growing, the SEC said.

    In September 2010, however, the couple noticed a renewal discrepancy — and contacted an investment company at which they believed they had holdings through Moskop. The company told them there were no accounts — and that the firm did not even handle the type of investment product the couple believed they had: certificates of deposit.

    Alarmed, the couple contacted their daughter, who went to work unmasking the scheme. Moskop then manufactured stories on the fly, but the daughter demanded the money be returned to her parents.

    Eventually Moskop sent checks for a small portion of the overall investments, but the checks bounced, the SEC said.

    Alarmed again, the daughter did some more digging and found out that Moskop had ripped off her parents in other investments for even greater sums, the SEC said.

    Moskop operated a firm known as Financial Services Moskop and Associates Inc