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Badge - Super Lawyers Jenice L. Malecki
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Chicago

Fraud Takedown in the Windy City

The city of deep dish pizza and Michael Jordan, recently made headlines for securities fraud as well.

It has been reported that two individuals from Sentinel Management Group were indicted on federal charges. They allegedly defrauded more than 70 customers out of over $500 million dollars.

Also reported, an admitted architect of a $34 million foreign currency trading Ponzi scheme, Daniel Spitzer, based in Chicago was recently sentenced to 25 years in prison for defrauding mostly elderly widows.

SBB Research Group was charged with fraud by the SEC, for inflating fund values over the course of multiple years. Allegedly, two top executives and a Chicago based hedge fund advisor raised millions in structured notes after starting up the Research Group in 2010. This capital was reportedly raised by convincing family and friends to invest after promising them when recording investments that the firm would ensure a fair value. Rather the CEO, Chief Operating Officer and Chief Compliance Officer falsely inflated the worth of those structured notes using a personalized valuation model. As a result the funds revenues were allegedly extraordinarily misstated and historical performance of the capital initially invested meant the investors needed to pay over $1 million dollars in fees. Once inconsistencies in the valuation model were uncovered by the SEC, the SBB Research Group allegedly worked to conceal this fraud from both the auditor of the firm as well as the investors. SBB was reportedly charged with violations of the Securities Exchange Act of 1934 and the Securities Act of 1933. Each defendant that was involved in this scheme carried permanent injunctions and all were ordered to face civil penalties.

In 2019, the SEC reportedly charged Rishi Shah, Shradha Agarwal and Brad Purdy, top executives of Outcome Health for going against anti-fraud provisions as well securities laws at both the local and federal levels. The scheme allegedly raised almost half a billion dollars. The allegations state that the executives falsified growth in their private healthcare advertising company and dishonestly raised millions of dollars from credulous investors. Alongside that, it was said that Outcome Health billed pharmaceutical companies for various display advertisements that never ran and misstated data on various third party surveys to fabricate effectiveness of the company’s advertisements as well as conceal any critiques of their advertisements. In various financial statements, the company would purportedly list their revenue to be more than it was by millions of dollars each year. This scheme reportedly raised Rishi, Shradha and Agarwal almost $480 million dollars because individuals were making investments in a company whose financial statements and documentation seemed sincere. Reportedly, almost half of those funds went to Agarwal and Shah. The SEC recently amended a complaint against this company and its executives for scheming investors and auditors out of millions of dollars for personal profit. The complaint essentially seeks penalties for breaching current anti-fraud provisions as well as a return of tainted capital among other things.

Zvi Feiner, Erez Baver and FNR healthcare were charged with running a scheme that allegedly targeted citizens in the Orthdodox Jewish community. As owner of FNR healthcare, Fiener supposedly approached over 60 investors and raised over $10 million in funds. Erez Baver, a former executive of the company, reportedly collaborated with Feiner to raise capital and funded the money into approximately twenty limited liability companies which acquire nursing homes throughout the Midwest region of the United States. Reportedly, Baver and Feiner, as representatives of FNR, persuaded the investors to consistently fuel money into what seemed to be low risk investments that would yield a profit once the nursing homes were running successfully. However, according to reports, these funds were used for struggling properties, distributions for other investors, loans as well as personal use. According to the SEC, various anti-fraud protections listed in the Securities Act of 1933 and the Securities Act of 1934 were violated. Purportedly, other companies, namely Cedarbrook Management and Netzach Investments, owned under Baver and Feiner respectively were also in hot water as they were listed as defendants for recovering investor capital to carry out this scheme. Cedarbrook Management and Baver reportedly settled charges in an agreement that prohibits him from involving himself with fraud hereafter and orders him to pay disgorgements, interest upwards of $1.5 million dollars alongside civil penalties amounting to $360,000.

Anyone can fall prey to a financial scheme at any stage in their life. Malecki Law has significant experience in representing defrauded investors from Fortune 500 financial institutions to elderly widows, in addition to whistleblowers for two decades. Malecki Law is “AV Preeminent Rated” by Martindale Hubbell, indicating “very high to preeminent legal ability and very high ethical standards as established by confidential opinions from members of the bar.” Jenice Malecki’s cases are continually cited in numerous industry publications, including The Wall Street Journal, The New York Times, Forbes and Newsweek. Malecki Law has handled a wide variety of securities cases, including whistleblower representation, securities arbitrations, regulatory proceedings and commercial litigation.

To schedule a free initial consultation with Malecki Law, please call (212) 943-1233, or email jenice@maleckilaw.com

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Client Reviews
★★★★★
Jenice Malecki, is one of the most helpful individuals Ive had the pleasure of speaking with. She is super knowledgeable. She helped me navigate the ever changing world of securities law. You will find her understanding of complex matters helpful and insightful. She is straightforward and candid. She makes your options easy to understand. I would recommend her without any hesitation. 10/5 stars! Enrique Tiburcio
★★★★★
I highly recommend Jenice and her team for any securities matters. She is a true professional and a pleasure to work with. She responds quickly to emails and listens to your concerns/questions. Jenice makes sure you're always informed and in the know about your case. Great experience and also very fairly priced! Jeff
★★★★★
An excellent professional who represented us in trial regarding a bank fraud, an unexpected and difficult time. A professional that worked hard, persevering and who stood toe to toe against firms that had a team of excellent lawyers backing them up. Her unflinching determination really stands out, it makes you feel you have someone who really cares about trying to recover what you lost from the people that wronged you. Salomon Levi
★★★★★
It is difficult to thank you in words when gratitude comes from the heart, so I will try to link feelings with writing. It is essential for us to mention your excellence as a professional, your aptitude on legal fields, and your unavoidable persistence. All of these virtues that elevate the profession you exercise in such an admirable way, go hand in hand with your sense of ethics, your human warmth and the transparency in your actions. To sum up, thank you for being a listening ear and for having the right word while transmitting information about the legal process. Having you as our representative during such an adverse situation was a privilege and enough reason for our eternal gratitude. Angeles Aparain
★★★★★
To say that my securities litigation was complex would be a severe understatement. With multiple parties involved and spanning many years, trying to understand the issues was daunting to say the least. Jenice and her team broke down the transactions by segment and by party uncovering every hidden expense. In the end, I was more than happy and could not thank Jenice and her team enough. I would not hesitate to recommend Jenice to anyone. She is highly professional, incredibly knowledgeable, well connected to industry experts, has a tireless work ethic and is so pleasant and easy to communicate with. Five stars for sure! Andrew Loughrane