Securities Industry Commentator by Bill Singer Esq

Beginning in April 2014, Polequaptewa worked at Blue Stone Strategy Group, which provided consulting services to Native American tribal governments throughout the United States. In addition to his consulting responsibilities, Polequaptewa led information technology and marketing at Blue Stone. 

After he began falling behind on work, Polequaptewa was relieved of IT and marketing duties in November 2014. Polequaptewa then was assigned to a consulting project in Florida for the Seminole Tribe. While on that project and angry that he had been stripped of his other job duties, Polequaptewa retaliated against Blue Stone by deleted the website and marketing materials that the company had developed over eight years. Polequaptewa's deletions cost Blue Stone more than $50,000 to restore its system to its state before Polequaptewa's deletions. 

After he resigned from the Florida project in November 2014, Polequaptewa continued to delete Blue Stone files, including client information, Blue Stone work product, and the company's backup files held by a third-party. Polequaptewa's final deletion was done by sending a "wipe" command to a Blue Stone desktop computer in Irvine. Polequaptewa's deletions were first detected when an employee in Irvine saw files being deleted from a Google drive account by Polequaptewa while he was working on the Florida project.

[I]n January 2018, Balogun's co-conspirators gained access to email accounts belonging to a Massachusetts attorney engaged in real estate closings. The co-conspirators then mimicked (spoofed) the real estate attorney's email account and sent emails to a Massachusetts resident who was the purchaser in a legitimate real estate transaction. The spoofed emails directed the Massachusetts real-estate purchaser to wire transfer $531,981 (which the purchaser believed was for a legitimate real estate transaction) to a bank account held by a California woman. The California women then sent $60,000 to an account in the name of "David Tecum," a fraudulent identity used by Oghenetchouwe Adegor Ederaine Jr., one of Balogun's co-conspirators, who received fraud proceeds at Balogun's direction. Ederaine has pleaded guilty to aggravated identity theft and money laundering conspiracy charges. 

Platinum was a New York City-based hedge fund founded in 2003.  The evidence at trial established that between approximately November 2011 and December 2016, Nordlicht and Levy, together with their co-conspirators, orchestrated a fraudulent scheme to defraud third-party holders of Black Elk's publicly traded bonds (the bondholders) by diverting to Platinum the proceeds from the sale of the vast majority of Black Elk's most lucrative oil fields even though the bondholders had priority over Platinum's equity interests. To execute this scheme, in early 2014, Nordlicht, Levy and others caused Platinum to secretly purchase Black Elk bonds on the open market and gain control of $98 million of the $150 million of outstanding bonds. The bonds were then transferred through a number of related entities to conceal their ownership and control by Platinum. Nordlicht, Levy and their co-conspirators then rigged a consent solicitation vote to amend the Black Elk indenture so that the proceeds from the sale of Black Elk's best assets would be paid to the preferred equity - which was held by Platinum and Platinum insiders - ahead of the other bondholders. Notably, non-Platinum related bondholders overwhelmingly voted against changing the indenture; one bondholder explained that to do so would constitute "giv[ing] up my rights and not get[ting] anything back for it," which he characterized as "kind of stupid." 

After the rigged vote was complete, Nordlicht, Levy and their co-conspirators took millions of dollars from the asset sale for themselves, family members and friends, including approximately $7 million to Nordlicht's father, approximately $250,000 to Levy and approximately $2 million to the brother of a co-conspirator.

Nordlicht, Levy and Joseph SanFilippo were acquitted of counts related to a separately charged scheme involving investors in the Platinum funds.  

I found that no evidence supporting the customer's underlying complaint was presented. The customer's attorney's letter, dated November 29, 2010, is the sole evidence supporting the customer's claim. I find that this letter states an attorney's position for a client which, without testimony of the client (the customer), would be inadmissible at a hearing. Further, based on Claimant's testimony at the hearing, I found Claimant's explanation of his advice to the customer to be credible regarding the various characteristics of the underlying annuity investments, which the customer purchased with full knowledge, as evidenced by her signature on the sales documents. 

On June 28, 2017, Zara and Firm customer HR executed a promissory note, which provided that Zara could borrow up to $50,000 from HR. The loan carried a 2% interest rate and matured on December 31, 2017. HR, who was 94 years old at the time of the loan, was not a member of Zara's immediate family, and Zara was the registered representative of record for HR's Firm accounts.

From July 2017 to October 2017, Zara borrowed a total of $44,292 from HR to pay her personal credit card bills. In October 2017, Zara repaid the amount she borrowed from HR in full, plus interest. 

Zara did not seek prior approval for, or disclose the receipt of, the loan to the Firm.

EPISODE SUMMARY

The U.S. economy is improving, but not all Americans are benefiting equally. Many Americans are failing to save, struggling with student loan debt and facing decreasing financial literacy, according to the new FINRA Foundation Financial Capability Study. On this episode, we delve into the study results and their implications.

• Securities Industry Commentator
• Bill Singer