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Ex-Broker Charged With Stealing From His Elderly Mother: Enforcement

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Attorney General Eric Schneiderman of New York announced the unsealing of two indictments charging former stockbroker Franklin Marone with allegedly stealing over $270,000 from multiple victims, including his 88-year-old mother.

Marone then filed fraudulent financial disclosures to conceal the stolen funds — all in order to avoid paying court-ordered restitution to the victims of his prior investment fraud scheme, according to the attorney general’s office.

“As we allege, the defendant in this case brazenly stole from those closest to him, showing no remorse for his prior victims and completely disregarding the law,” Schneiderman said in a statement.

The indictments, filed in Queens County and Greene County, charge Marone with grand larceny, identity theft, scheme to defraud, criminal impersonation, offering a false instrument for filing and perjury.

If convicted, the Marone faces up to 20 years in state prison. 

According to statements made by prosecutors and documents filed with the courts, in June 2004, Marone was convicted in Greene County Court for fraud. Between November 1998 and January 2004, Marone targeted his fellow members of the ski patrol at a Catskill mountain resort and solicited them to invest over $5.4 million in a series of fictitious equity funds that he dubbed “Patrollers Capital Funds.”

In furtherance of his scheme, Marone created fraudulent stock certificates, prepared phony account statements, and sent emails to his victims touting the performance of the phony funds. In reality, all of the investors’ money was deposited directly into Marone’s personal accounts.

After pleading guilty, Marone was sentenced to 6 to 18 years in state prison and ordered to pay over $4.6 million in restitution to his victims.

Although he still owes $1.2 million to the victims of his securities fraud scheme, Marone began missing court-ordered restitution payments beginning in early 2014. After his continued failure to make timely payments, the courts directed Marone to complete financial disclosure affidavits. In July and August 2017, Marone filed two sworn affidavits with the court, attesting that he had no assets or income.

However, an investigation revealed that, contrary to the statements Marone filed with the court, Marone allegedly stole more than $270,000 from multiple victims, including his 88-year-old mother, between January 2014 and September 2017.

Prosecutors allege Marone stole over $100,000 cash from his mother, and on four separate occasions sold thousands of dollars of her valuables at a local pawn shop. Moreover, between May and June 2016, Marone allegedly impersonated his mother in a series of recorded phone calls with a financial institution, in an attempt to steal over $50,000 from her account.

Marone also allegedly targeted an ex-girlfriend and a family friend and stole over $45,000 from them. Marone allegedly used the stolen monies to pay for over $40,000 in upgrades to his Jeep Wrangler, multiple Caribbean cruises, and thousands of dollars in premium gym memberships for himself, his current girlfriend and their respective families. 

In addition to the two pending indictments in Greene and Queens Counties, Marone is scheduled to appear in Greene County Court for a hearing related to his $1.2 million in outstanding court-ordered restitution from his prior conviction on March 1.

Advisor Pleads Guilty to Scamming In-Laws, Other Seniors

Chicago-based investment advisor Daniel Glick, a defendant in ongoing Securities and Exchange Commission litigation, pleaded guilty on Jan. 9 to one count of wire fraud.

The United States Attorney’s Office for the Northern District of Illinois filed a criminal information charging Glick with wire fraud on Nov. 15.

According to the plea agreement, from at least 2011 through at least 2017, Glick engaged in a fraudulent scheme to benefit himself to the financial detriment of his clients and two financial institutions. As part of the scheme, Glick misappropriated at least $5.2 million from clients, provided financial institutions with forged checks and other documents, and lied to clients about the use status, and safety of their invested funds, according to the plea agreement.

The plea agreement further states that most of the funds that Glick misappropriated belonged to elderly clients, including his mother-in-law and father-in-law and an individual in a nursing home, and that Glick used some of the stolen funds to pay personal and business expenses.

The SEC brought an emergency action on March 23 against Glick and his unregistered, Chicago-based investment advisory firm, Financial Management Strategies, based on substantially the same conduct. The SEC’s litigation against Glick and FMS continues.

SEC Charges Investment Advisor and Execs With Real Estate Offering Fraud

The SEC announced fraud charges against a California-based investment advisor, its CEO and its former COO, for lying to investors in a real-estate related securities offering fraud.

According to the SEC’s complaint, Hoplon Financial Group and its CEO, Daniel Vazquez Sr., created the New Economic Opportunities Fund I, LLC vehicle for the ostensible purpose of pooling investor funds to purchase and flip residential real estate properties.

The complaint alleges that between 2011 and 2014, Hoplon and Vazquez sold membership units in the fund, raising $2.18 million from 27 investors — primarily from investors’ individual retirement account funds — based on misrepresentations about how much compensation they would take.

The complaint further alleges that virtually from the outset of the offering, Hoplon and Vazquez, with the assistance of Hoplon’s then-COO Gilbert Fluetsch, misused most of the funds to pay unrelated business or personal expenses.

In addition, the complaint alleges that, by promoting and selling these securities, Hoplon and Vazquez — a state-registered investment adviser and registered representative of a broker-dealer, respectively, at the time of the alleged misconduct — violated federal broker-dealer registration provisions.

Managing Director Used Prop Account to Trade Directly With Advisory Clients

The managing director of a dually registered broker-dealer and investment advisor was censured and order to pay disgorgement and a fine for trading with his advisory clients out of a proprietary account without advance notice and consent.

According to the SEC’s order, from approximately March 2013 through December 2015, John Tarpinian engaged in thousands of trades while he was associated with Newport Coast Securities between Newport’s brokerage proprietary trading account and advisory client accounts. He did this without first providing written disclosure that that he was effecting the trades as a principal or obtaining consent from his clients for such trades, according to the SEC.

The SEC asserts that he knowingly failed to provide the required disclosure about the markups received as well as obtain the advance consent to engage in principal transactions.

Tarpinian was ordered to pay more than $53,000 in disgorgement and prejudgment interest, as well as a $25,000 civil money penalty.

SEC Charges Transfer Agent and Its Principal With Fraud for Misappropriating Client Funds

The SEC filed a complaint in U.S. District Court for the District of Nevada against a Las Vegas-based registered transfer agent, and its president and sole owner, Alan Shinderman, alleging that they misappropriated approximately $630,000 of client funds.

The SEC alleged that, in August 2013, Quicksilver Stock Transfer received wire transfers totaling $1.45 million for the benefit of China Energy Corp. The funds were destined for certain of China Energy’s shareholders by way of Depository Trust & Clearing Corp. (DTCC).

The complaint alleges that Shinderman diverted approximately $630,000 of this money for his and Quicksilver’s own use and benefit, including $500,000 to make a four-day loan to a Nevada real estate company. 

According to the complaint, the borrower failed to repay the principal or interest as planned. Consequently, Quicksilver and Shinderman did not timely forward China Energy’s funds to DTCC, despite repeated requests. Quicksilver and Shinderman also made a series of misrepresentations in response China Energy’s and DTCC’s requests for the funds.  

Quicksilver ultimately paid DTCC approximately six weeks later, after recovering the loan principal from the real estate company. The complaint also alleges that Quicksilver untimely filed an independent accountant’s report with the SEC on Jan. 13, 2015, for the period ending Dec. 31, 2013.

The SEC’s complaint seeks permanent injunctions and the imposition of civil penalties.

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