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Well-known for Hollywood celebrities, beautiful coastlines, Southern California is a bustling tourist destination and home for over 23 million people. Being a geographic and cultural landmark, Southern California is a breeding ground for both fame and fraud.
SoCal has unfortunately been home to some of the large securities frauds in U.S. history, including the $200 million Ponzi Scheme allegedly operated by J. David & Company in the early 1980s. In 2014, it has been reported that FBI agents arrested 2 people in Southern California for allegedly running a $110 million Ponzi scheme through their firm, Pacific Property Assets. In another instance, an LA pastor was allegedly charged with bilking more than 82 people out of nearly $7 million.
In 2020, Paul Horton Smith Sr. reportedly faced an asset freeze for carrying out a Ponzi scheme in Southern California that targets senior citizens. For over 2 years, Smith Sr. would allegedly sell securities from his company namely Northstar communications LCC and would subsequently market these securities using his investment advisory firm names eGate LLC. Supposedly, Smith Sr would market his securities guaranteeing interest payments between 3-10.5% if they decided to invest in a misleading program labeled private annuity contracts. According to reports, Smith failed to invest funds that were raised in securities and instead used those incoming investments to pay returns. This Ponzi scheme reportedly accumulated $5.6 million dollars from 35 investors and paid out about $5.2 million in interest payments and principle to investors. In addition, Smith purportedly used investor capital to settle other investor lawsuits. According to reports, Smith, Northstar, and eGate were in violation of the Securities Act of 1933, Securities Exchange Act 1934, and the Investment Advisors Act. The SEC is reportedly pursuing disgorgement, injunctions, and penalties as well as criminal charges against Smith.
Recently, in 2019, the SEC reportedly announced a settlement deal made by Equal Earth, CEO Andrew J Duggan and COO Ghassan “Mark” Hamade bilked over $5 million dollars from at least 266 investors. A green energy company, Equal Earth, and its directors allegedly made misleading statements to its various investors that falsely exaggerated the stability of the company’s financial security as well as lied that the company would soon broadcast its supposed historical revenues as it acquired multiple other establishments securing future revenue and had significant power generation capacity through future business endeavors. As a majority of these claims were purportedly false, they were able to drain hundreds of investors from about $5.6 million dollars. In addition to these claims, Duggan reportedly sold some of his stock from the company and embezzled almost 40,000 in investor capital. According to the United States District Court for the Southern District of California, the defendants were ostensibly in violation of the Securities Exchange Act of 1934 as well as the Securities Act of 1933. They did not accept or deny any of the allegations against them but reportedly agreed on judgments in which they are enjoined from violating any anti-fraud regulations. Equal Earth, Duggan, and Hamade reportedly agreed to pay about $7 million dollars, $900,000 as well as $167,500 respectively alongside other future employment restrictions in the securities industry.
Just like that fraud can impact the normal routine of establishments and everyday citizens that invest trustingly expecting a fair return. Malecki Law has worked with both Fortune 500 companies, senior citizens, whistleblowers as well as clients from various geographic regions. Malecki Law handles a diverse set of securities cases including but not limited to unsuitability claims, commercial litigation, arbitration, business contract negotiations, and whistleblower claims. Jenice Malecki’s understanding and comprehension of the complexities in the securities industry allow her to guide her firm in a manner that has proven critical to her success in reaching favorable results for various clients. Jenice Malecki has received numerous accolades specifically being named as a Top Attorney by Super Laws and the National Law Journal as well as being featured in prominent publications such as the New York Times Magazine, National Law Journal, and New York Magazine.
To schedule a free initial consultation with Malecki Law, please call 212-943-1233, or email firstname.lastname@example.org.