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Texas

Large Financial Schemes in Cowboy Country

Texas is the largest state in the “Continental United States” and trails only California in population size. The state leads the nation with job creation and business establishment with consistent growth rates over the last decade. As the state grows and develops, its risk and experience with fraud have also increased.

Financier R. Allen Stanford reportedly operated a 20-year long scheme that ultimately defrauded roughly 30,000 investors out of more than $7 billion, one of the most notorious securities frauds in U.S. history. More recently, SEC has reportedly charged Frederick A. Voight of Houston for operating a $114 million scheme in which he allegedly raised funds for Driver Alertness Detection Scheme through promissory notes while guaranteeing 42% return, but in reality funneling the money to pay investors in a previous fraudulent scheme, typical of Ponzi schemes.

Woodbridge Group of Companies, a Texas-based company was the home and facilitator of a full-fledged Ponzi Scheme that reportedly schemed thousands of investors. Brett Pittsenbargar, one of the top revenue producers of the firm, was in hot water for allegedly selling securities unlawfully alongside other tradable financial assets while functioning as an unregistered broker. Before this, Woodbridge Group of Companies and its previous owner Robert Shapiro allegedly worked with numerous other unregistered brokers to bilk $1,000,000,000 out of retail investors. Other directors that reportedly served Woodbridge Group of Companies and benefitted from the scheme were charged as well. According to reports, in 2019, Woodbridge, Shapiro, and any other companies were ordered to pay 1 billion dollars for carrying out this extensive scheme. Purportedly, SEC reports claim that Pittsenbarger’s other establishments sold Woodbridge securities to accrue an estimated $18,000,000 in tainted capital politically as most of the brokers were unregistered. This money was supposedly accumulated through over 40 investors across 4 states. Reportedly, this scheme brought Pittsenbarger almost 1 million dollars in compensation. Pittsenbarger and his other companies were charged with breaching the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 15(a)(1) of the Securities Exchange Act of 1934. The SEC is apparently seeking disgorgement of tainted capital, its interest as well as any penalties the defendants are liable to pay.

Eddie D. Austin Jr., Andrew I. Farmer, Scott R. Sieck, John D. Brotherton, and Carolyn P. Austin were apparently listed as defendants for carrying out a pump-dump scheme that defrauded many with penny stocks. Pump and Dump fraud refers to when individuals falsely inflate the price of an owned stock through unlawful means and then subsequently sell the inexpensive stock for a higher price. When those inflated stocks are sold by the schemers the investors are at a loss because the price for the stock decreases significantly. This is much easier to facilitate in an era of growing activities behind a screen, email, social media, and data hacks. In this particular case, the defendants supposedly took control over the free trading stock of a micro-cap stock. This scheme was reportedly carried out by portraying a misleading interest in the market and falsely increasing share prices. The perpetrators supposedly distributed the stocks to companies that they had influence over and managed various deceptive commercial advertising strategies that resulted in the propagation of investors and kept the scheme going. According to the SEC, the accused exploited the price of the stock as well as the extent of trading by selling virtually meritless stock on unwary investors. Austin Jr., Farmer, Sieck, Brotherton, and Austin breached Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934. Although the settlement itself is still under court approval, the defendants are reportedly ordered to pay over 10 million dollars in disgorgement as well as over $890,000 in interest not including other alleged consequences such as director bars and restrictions on purchasing and selling securities in the future.

Several securities fraud go undetected but when these types of extensive schemes arise, many people are victimized and lose money. Malecki Law has extensive experience in representing a diverse clientele from both Fortune 500 companies as well as everyday individuals. For over two decades, Jenice Malecki has worked to provide insight on securities law and utilize her dynamic exposure to run a firm that satisfies the needs of those who need support for arbitrations, regulatory proceedings and unsuitability claims to name a few.

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