This is your July 2, 2014 issue of the State Securities Board Bulletin, an occasional roundup of regulatory news and investor education information.
Indictment Alleges Sale of Fraudulent Investments in Overseas Medical KitsA Brazoria County grand jury has indicted Alan Derek Jernigan of Lakeway on charges of securities fraud, money laundering, and aggregated theft for the alleged offer for sale and sale of investments in deals to export medical test kits to foreign countries. The indictment, issued June 5, alleges that Jernigan sold nearly $463,000 worth of investment contracts while failing to disclose a number of financial problems to investors. The securities fraud indictment alleges that Jernigan misrepresented that his companies had secured exportation contracts with the governments of the Philippines and Malaysia and that he had completed similar deals in the past. The indictment also alleges that at the time Jernigan sold the investment contracts, he failed disclose to investors that he filed a Chapter 13 Voluntary Bankruptcy Petition in Galveston in 2007, a proceeding that was pending during his sale of the allegedly fraudulent investments. Jernigan also failed to disclose he had not paid a $53,847 Circuit Court judgment against him in Maryland related to a similar investment program. Brazoria County Criminal District Attorney Jeri Yenne has appointed State Securities Board enforcement division attorneys Matthew Leslie and Greta Cantwell as special assistant criminal district attorneys. Corpus Christi Adviser Travels the Revocation Road Unauthorized withdrawal of client funds. Making unsuitable recommendations to clients. Failure to pay clients their promised return. Excessive fees. And lying to the State Securities Board staff. Result: Texas Securities Commissioner John Morgan on June 27 revoked the registrations of Kenneth Wayne Graves and Warren Financial Services (WFS), both of Corpus Christi. The Default Order was entered June 27 after Graves, an investment adviser representative, and WFS, the investment advisory firm he operated as the managing member, failed to respond a Notice of Hearing filed May 19 at the State Office of Administrative Hearings. Graves sold a security that promised to pay between 2.5% and 5% of WFS' monthly gross income for periods of between three and seven years. Five investors paid a total of $425,000 for the investment, but the firm underpaid investors and in many months didn't make any payments to certain investors. Graves told State Securities Board staff that the WFS investments were "verbal commitments," when in fact the investments were documented. At Graves' urging, one client in May 2012 purchased $70,000 of the investment, even though that amount accounted for the vast majority of the assets WFS was managing for her. The client's principal was locked up until July 1, 2019. Graves and WFS charged clients fees that were much higher than the 2% annual management fee listed in its investment management agreement. Graves also made unauthorized withdrawals of $138,381 in advance management fees from clients' custodial accounts. About the Texas State Securities Board The State Securities Board registers securities offered or sold in Texas; oversees the firms and individuals selling securities or providing investment advice; enforces the Securities Act through criminal, civil and administrative penalties; and provides investor education presentations and material. For more information, contact Robert Elder, Communications, Communications Coordinator & Investor Education Specialist, at 512 305 8386. | 
No comments:
Post a Comment