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Ohio Securities Attorneys

Investment Fraud in Ohio: Why You Need a Securities Attorney

House and lakeSecurities fraud can happen anywhere and can wreak havoc on families and communities. When an unregistered broker sells unregistered securities, investors can be harmed and may find themselves in need of an Ohio securities attorney. Residents of northeast Ohio have had to reckon with this fallout from a suspected Ponzi scheme. According to an October 2019 article in the Cleveland newspaper The Plain Dealer, Rick St. George and Matthew Andrea pled guilty to ten felony counts of selling fraudulent securities. Ultimately, they were sentenced to five years probation and ordered to pay back the $200,000 they swindled from a dozen northeast Ohio retirees. How did this happen? Rick St. George and Matthew Andrea, unlicensed brokers, sold promissory notes to primarily elderly investors by offering financial seminars over dinners at local restaurants. They convinced investors to invest in Flava Puff, a snack company that sold cheese doodles and popcorn, but which ultimately went under. Flava Puff is currently under investigation by the FBI on suspicion of being a front for a Ponzi scheme. The company’s slogan? “Nothing to Hide.”

Before this venture, in 2007, Rick St. George convinced an acquaintance’s parents to invest in a Florida solar panel company. According to The Plain Dealer, “[its] stocks were trading at about 10 cents at the time, after he told them that he ‘personally believed’ the stocks would rise to $80 to $100 per share.” These returns never materialized. Soon afterward, Rick St. George was introduced to Aaron Hendra, an Australian rock musician trying to break into the American market. Rick St. George vowed to do everything he could to help this musician. Around this same time, he started selling Flava Puff investments, and his finances began to suffer. Rick St. George and the Australian band eventually moved from a mansion in Beverly Hills to a more modest home in Brecksville, Ohio. In 2014, he filed for bankruptcy, and the details of his various ill-fated business ventures came to light in bankruptcy court.

Between the cheese doodles and the Australian band members, it is easy to get caught up in the bizarre details of this case. But at its core, this is a simple case of securities fraud, involving an unregistered broker who had a track record of misrepresenting investment opportunities, and who thought he could get away with swindling a group of vulnerable Ohio retirees.

How Ohio Holds Brokers Accountable and Protects Investors from Broker Fraud

A branch of the Ohio Department of Commerce, the Ohio Division of Securities enforces the Ohio Securities Act, ensures that securities offered in Ohio are properly registered with the State, licenses registered representatives and broker-dealers to operate in Ohio, and acts as a resource for consumer protection. Led by its commissioner, Andrea Seidt, the Ohio Division of Securities “can pursue administrative actions, civil injunctive actions and criminal referrals.” Ohio also asserts that it is “a model state in its licensing, registration, and enforcement practices.” Indeed, the Division sponsors innovative programming. In October 2019, the Ohio Division of Securities teamed up with the Toledo University School of Law to host a conference on “the latest issues in the Securities industry.”

One of the major responsibilities of the Ohio Division of Securities is ensuring that the Ohio securities industry follows the regulations outlined in the Ohio Securities Act. The Ohio Securities Act defines what constitutes a security under Ohio law, describes the process by which investment advisers and dealers are registered, and describes how dealers engaging in fraud may be held civilly liable.

The Division’s commitment to regulation goes beyond merely registering brokers and investment advisers. The Division also periodically updates investment professionals on new responsibilities. In March 2019, the Division issued a notice to investment advisers that, as of March 20, 2019, they now mandatory reporters when it comes to suspected financial abuse of the elderly. The Division has produced a guide to elder abuse for investors and their families, as well as a booklet on elder abuse for the financial professionals who work with the elderly. All resources are made readily available online. This is just one way that the Division helps Ohioans avoid fraud.

The Ohio Division of Securities maintains the website conartist.ohio.gov to educate the public on investment fraud. The initiative mostly focuses on affinity schemes, emphasizing that con artists can be masquerading as trusted friends, neighbors, or fellow churchgoers. To this end, they have produced a series of radio and television spots. They have also issued pamphlets, including “Are You an Informed Investor?”, “How to Spot a Con Artist” and “Choosing a Stockbroker”. The Division also provides information on affinity fraud, Ponzi schemes, pyramid schemes, promissory notes, viatical settlements, and annuities. Finally, they encourage Ohioans to ACT now—Ask if the securities and the brokers are properly registered in Ohio, call the Ohio Division of Securities at 1-877-N-VEST-411, and think things over before investing.

Ohio state securities regulators play an important role in investor protection and consumer advocacy, but their role is relatively limited. If you are seeking to recover funds lost through securities fraud, nothing compares to having an Ohio securities attorney by your side. Only securities attorneys can recover lost funds, so don’t hesitate in retaining counsel.

Next Step: Contact a Securities Attorney

While investing can be exciting and a potential way to build wealth, it is important to stay informed about fraud so that you can protect yourself and safeguard your financial future.

If you fear you may have been a victim stock or investment fraud, please contact the experienced securities attorneys of Fitapelli Kurta, who handle arbitration matters in Ohio as well as other matters through local counsel, where necessary. Our securities fraud attorneys have worked with investors from Ohio. Whether you’re in Cincinnati, Columbus, Cleveland, Toledo, Akron, Youngstown, Wooster, or another city or town in Ohio, we’re here to help you. We only get paid if you do. Our attorneys work on contingency: we only collect a fee from clients if we can recover money on their behalf. Call (877) 238-4175 or email info@fkesq.com for your free case consultation.