featured in today's BrokeAndBroker.com Blog:
Even though the promissory notes were outside the scope of his work at Girard, LeBlanc solicited Girard clients for the notes, and 11 of the 14 investors were clients of the firm. Six clients withdrew funds from their Girard account to invest in the coffee shop.The notes promised an annualized return of 8% for three years. They were issued through Missco Services LLC, a now-defunct entity that LeBlanc controlled. The Missco Services notes were sold as an investment in a coffee shop in Fulshear, in Fort Bend County.Jason LeBlanc had no ownership interest in the two companies that controlled the coffee shop business, which were called Alpha Grounds Coffee LLC and Higher Grounds Java Holdings LLC. But he incorporated both companies, opened bank accounts for both, and served as chief financial officer for both.Alpha Grounds closed in June 2017. The coffee shop shut down and sold its equipment at a loss.LeBlanc registered with the Securities Commissioner as an investment adviser representative of Vere Global Wealth Management in 2016. When he registered he disclosed his corporate duties for Missco Services and the related companies.However, LeBlanc failed to disclose the full extent of his activities for Missco, which included selling the promissory notes to clients at Girard Securities.In 2017 the Financial Industry Regulatory Authority barred LeBlanc from working for any broker-dealer it regulates.
SIDE BAR: READ the FINRA AWC
[T]he United States District Court for the District of Maryland permanently enjoined Defendants Michael K. Martin and Capital Source Lending LLC from violating Sections 5 and 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 ("Exchange Act"). The Court also enjoined them from directly or indirectly participating in the issuance, offer, or sale of any security, with the exception of the purchase or sale of securities listed on national securities exchanges. Martin was further enjoined from violating Section 15(a) of the Exchange Act.The Court ordered Martin and Capital Source Lending to disgorge $2,689,660 plus $341,130 in prejudgment interest jointly and severally, and assessed a civil penalty against each of them in the amount of $3,030,791.As to Defendant Thomas H. Vetter, the Court permanently enjoined him from violating Section 15(a) of the Exchange Act, and from aiding and abetting violations of Section 17(a) of the Securities Act and Section 10(b) and Rule 10b-5 of the Exchange Act. The Court enjoined Vetter from directly or indirectly participating in the issuance, offer, or sale of any security, with the exception of the purchase or sale of securities listed on national securities exchanges. The Court ordered Vetter to pay $143,326 in disgorgement plus $19,772 in prejudgment interest, and a civil penalty of $163,098.Defendants North Star Finance LLC, Thomas G. Ellis, and Yasuo Oda, previously consented to the entry of permanent injunctions against them. In its October 17 order, the Court ordered North Star to disgorge $2,062,255 plus prejudgment interest of $256,905 and to pay a civil penalty of $2,319,160. Ellis was assessed $822,282 in disgorgement and $101,941 in prejudgment interest jointly and severally with North Star, and was ordered to pay a separate civil penalty of $924,223. Similarly, Oda was ordered to pay $683,498 in disgorgement and $84,736 in prejudgment interest jointly and severally with North Star, and was ordered to pay a separate civil penalty of $768,234.Finally, the Court ordered Relief Defendants Goodwill Funding Inc. and Charel Winston to pay disgorgement and prejudgment interest jointly and severally of $159,313.