Securities Industry Commentator by Bill Singer Esq

The Project was led by Stratus Group, an Iranian conglomerate controlled by Sadr and his family with international business operations in the construction, banking, and oil industries.  In December 2006, Stratus Group incorporated a company in Tehran, which was then known as the Iranian International Housing Corporation (IIHC).  IIHC was responsible for construction for the Project.  Thereafter, IIHC entered into a contract with a subsidiary of a Venezuelan state-owned energy company (the VE Company), which called for IIHC to build approximately 7,000 housing units in Venezuela in exchange for approximately $475,734,000.  Stratus Group created the Venezuela Project Executive Committee to oversee the execution of the Project.  Sadr was a member of the committee and was responsible for managing the Project's finances.

In connection with his role on the Project, Sadr took steps to evade U.S. economic sanctions and to defraud U.S. banks by concealing the role of Iran and Iranian parties in U.S. dollar payments sent through the U.S. banking system.  For example, in 2010, Sadr and a co-conspirator used St. Kitts and Nevis passports and a United Arab Emirates address to incorporate two entities outside Iran that would receive U.S. dollar payments related to the Project on behalf of IIHC.  The first entity, Clarity Trade and Finance (Clarity), was incorporated in Switzerland, and the second, Stratus International Contracting, J.S., aka Stratus Turkey, aka Straturk, was incorporated in Turkey.  Stratus Turkey and Clarity were both owned and controlled by Sadr and his family members in Iran.  Sadr then opened U.S. dollar bank accounts for Clarity and Stratus Turkey at a financial institution located in Switzerland. 

Thereafter, Sadr and others conducted a series of international financial transactions using Clarity and Stratus Turkey for the benefit of Iranian parties in a manner that concealed the Iranian nexus to the payments, in violation of U.S. economic sanctions.  Specifically, between April 2011 and November 2013, the VE Company, at the direction of Sadr and others, made approximately 15 payments to IIHC through Stratus Turkey or Clarity, totaling approximately $115,000,000.  

The vast majority of registered financial professionals are trustworthy individuals who act with integrity. Unfortunately, some are not. That's why FINRA encourages investors to "ask and check" with BrokerCheck before investing with a financial professional.

And investors can stay vigilant throughout the course of their relationship with their broker by keeping an eye out for signs of misconduct. There are certain behaviors that FINRA examiners and enforcement staff see time and again that raise red flags and often warrant disciplinary action, and sometimes expulsion from the financial industry.

Often, these red flags aren't too difficult to spot. Here are four behaviors that should have you asking questions.

Beginning in July 2010, while associated with ICC, Blattner served as the registered representative for customers HM and KM. Between July 2010 and April 2013, the value of HM and KM's joint account declined by approximately $75,000. In April 2013, HM complained, orally and in writing by email, to Blattner about his management of their account and the losses they had suffered. 

Blattner did not disclose HM's April 2013 complaint to ICC, and that complaint was never reported on his Form U4. Instead, Blattner wrote HM and KM a $15,000 check from his personal checking account. Blattner instructed KM to open a new account at ICC and to deposit the $15,000 check into the new account, along with the funds that remained in the joint account, which KM did. Blattner told HM and KM that the purpose of the check was to generate trading profits to recoup the losses they had suffered in the joint account. 

• Securities Industry Commentator
• Bill Singer