Additional Archives
Securities Division Newsletters
December 2011 December 2011 Flipviewer Version
In this issue, we report on a speech Secretary Marshall gave to the Cornelius Police Department’s annual senior citizens holiday luncheon and safety program. She tells attendees that the tips she is providing will turn them all into “lean, mean, fraud-fightin’ machines!” We also report that the Investor Education Program had reached another milestone by having conducted its 400th presentation earlier this year. To date, nearly 29,000 North Carolinians have heard the Securities Division’s fraud fighting messages. We also report on the program states have developed to provide a coordinated review for investment advisers switching from federal to state securities regulatory oversight as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. We also provide our updated Calendar of Upcoming Events as well as recent enforcement actions and pertinent news from other securities regulators.
 
November 2011
In this issue, we report that a federal court has ordered Sidney S. Hanson and Charlotte M. Hanson, a Charlotte couple, and their companies to pay $24 million for defrauding customers in a foreign currency Ponzi scheme. Sidney Hanson is currently a federal prisoner awaiting sentencing after pleading guilty on March 31, 2011 to securities fraud and mail fraud. We also reprint an investor alert issued by the Securities and Exchange Commission warning investors of potential fraud associated with seminars purporting to teach trading strategies. We also provide information for investment advisers relating to the switch from federal to state regulatory oversight as mandated by the Dodd-Frank Act. We also report that the U.S. District Court for the Middle District of North Carolina has ordered Rodney W. Whitney and Nicholas T. Cox and their company, Integra Capital Management, LLC, to pay over $6.9 million in restitution to victims of a Ponzi scheme involving commodity futures and off-exchange foreign currency transactions. We also provide links to investor alerts issued by the Financial Industry Regulatory Authority (FINRA), including one concerning publicly registered non-exchange traded real estate investment trusts (“non-traded REITs). We provide updates on the liquidation proceeding for MF Global, Inc., from the Securities Investor Protection Corporation (SIPC), as well as our Calendar of Upcoming Events and recent enforcement actions.
 
October 2011
In this issue we report that NC Secretary of State Elaine F. Marshall was awarded the 2011 Public Sector Award by the NC Senior Consumer Fraud Task Force in recognition of her work to protect North Carolina consumers from a wide range of frauds targeting consumers, from securities and charities scams to counterfeit trademarked goods and notary fraud. We include a copy of the letter Secretary Marshall wrote to three members of North Carolina’s congressional delegation expressing her concerns about some of the provisions of H.R. 2930, the Entrepreneur Access to Capital Act. We report that Bryan Keith Coats of Clayton, NC, pleaded guilty in U.S. District Court to his role in $40 million Black Diamond Ponzi scheme. Coats is the seventh person to be convicted in this case. We also report that the U.S. District Court for the Western District of North Carolina entered an order of default judgment and permanent injunction against Barki, LLC, a foreign currency firm owned by Bruce C. Kramer of Mint Hill, NC. The order stems from an enforcement action filed in March 2009 by the US Commodity Futures Trading Commission (CFTC) that charged Barki and Kramer with fraudulent solicitation and misappropriation in a $38 million Ponzi scheme. Also included are articles on the Division’s activities at the 2011 NC State Fair, actions by the states during 2011 on behalf of investors around the country, an investor alert about self-directed IRAs, and the results of coordinated state examinations of investment advisers. We also reprint a Courthouse News Service article on E*Trade. Finally, we update our regular features, our Calendar of Upcoming Events, cases that are On The Docket, Recent Enforcement Actions and News from the Regulators.
 
September 2011
In this issue we spotlight the top investor traps and threats as identified by the North American Securities Administrators Association (NASAA). This year’s report categorizes the threats by product or practice. The investment products causing state regulators the greatest concern are schemes involving distressed real estate, energy investments, gold and precious metal investments, promissory notes and securitized life settlement contracts. The investment practices causing concern include affinity fraud, bogus or exaggerated credentials, mirror trading, private placements, and securities and investment advice offered by unlicensed agents. We also feature the latest article in the NASAA “Informed Investor” series. This latest article focuses on the ways con artists find victims by exploiting social networks. We also feature an updated alert issued by the U.S. Securities and Exchange Commission (SEC) warning investors of an advance fee scheme by Imperia Invest IBC targeting deaf investors. We also reprint an announcement made by the Financial Industry Regulatory Authority (FINRA) about the fines they have imposed on five broker-dealer firms for mischaracterizing the commissions they charged clients as handling fees.
 
August 2011
In this issue we report on a series of educational presentations to 10- to 14-year olds attending the Junior Achievement of the Central Carolinas’ week-long summer Biz Camp. Campers made pretend investments in various livestock animals and learned how real-world events affected the value of their investments. We also provide information for investment advisers subject to the change in regulatory oversight from the federal government to the states in which they do business as mandated by the Dodd-Frank Act. We also reprint an investor alert on structured notes with principal protection that was jointly published by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). We also include our usual Calendar of Upcoming Events as well as the latest enforcement actions and regulatory news.
 
July 2011
In this issue we report that Dennis Todd Hagemann, 42, of Raleigh, NC pleaded guilty in Wake County Superior Court to 12 felony counts of securities fraud following an investigation by the NC Department of the Secretary of State into his role in a Ponzi scheme that defrauded at least ten victims of $980,000. Hagemann was sentenced to between 12 years and 2 months and 16 years and 2 months in prison and was ordered to pay restitution to his victims. We also report on an action filed by the federal Commodity Futures Trading Commission (CFTC) against Robert S. Moss of Charlotte, NC, who fraudulently solicited more than $3 million from 22 investors to trade options on commodity futures through a commodity pool while never being registered with the CFTC. The CFTC order requires Moss to repay victims more than $1.5 million and to pay a civil monetary penalty of $500,000. He also is permanently barred from any commodity-related activity. We also update further developments in the case involving Bryan Keith Noel (whose sentencing was reported on in the February/March 2011 newsletter). The US Justice Department has released almost $1 million in forfeited funds for distribution to Noel’s victims. We report on the testimony given by David Massey, NC Deputy Securities Director and President of the North American Securities Administrators Association (NASAA), to the US Senate Banking, Housing and Urban Affairs Committee, about the gains made in investor protection since the enactment of the so-called Dodd-Frank bill. We provide a report on a presentation to agents of the Cumberland County Department of Social Services about the Elder Investment Fraud and Financial Exploitation (EIFFE) Prevention Program. We provide information about temporary relief being granted by the NC Securities Division to private fund investment advisers. We also reprint investor alerts about Exchange-Traded Funds (ETFs) and foreign currency exchange (Forex) trading. We also include our usual Calendar of Upcoming Events as well as the latest enforcement actions and regulatory news.
 
June 2011
In this issue we report that Shelby Dean Martin, 73, of Mooresville, NC pleaded guilty in Iredell County Superior Court to 19 felony counts of securities fraud following an investigation by the North Carolina Secretary of State’s Securities Division. He was sentenced to two consecutive Class C felonies and must serve between 9 years 8 months to just over 13 years in prison. He was also ordered to repay victims approximately $5.35 million. We also report on complaint filed by the federal Commodity Futures Trading Commission (CFTC) against Neal E. Hall, of Reidsville, NC. The CFTC alleges that Hall has violated several of its regulations and has never been registered with the CFTC in any capacity. We also report on the investment fraud prevention program that was held in Wilmington on June 16 (mentioned in last month’s newsletter), the eighth in a series of compliance workshops for state-registered investment advisers (held in Greenville), and the financial literacy summit in Greensboro (also mentioned in last month’s newsletter). We also reprint an Informational Bulletin that was sent to investment companies and investment company service providers concerning statutory changes to the investment company notice filing fee. We also include our usual Calendar of Upcoming Events as well as the latest enforcement actions and regulatory news.
 
May 2011
In this issue we report that Ronnie D. Rainey, 44, of Elk City, Oklahoma, was sentenced to 10 years’ imprisonment by U.S. District Court Judge James C. Dever, III, for his role in defrauding approximately 65 investors -- including 12 North Carolina investors -- out of $2.2 million. We provide information on two upcoming investor education events, one in Wilmington on June 16, and one in Greensboro on June 22. The Wilmington event is being jointly sponsored by the NC Department of the Secretary of State, the Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission (SEC), the Cape Fear Area Agency on Aging and AARP North Carolina. The Greensboro event is being sponsored by the NC Department of Public Instruction and will provide financial literacy training to teachers from across the state. We also spotlight the Investing Online Resource Center, a site where investors can learn how to invest safely through online investment sites. We also reprint a news release from FINRA announcing its creation of a web-based searchable system that makes its disciplinary actions against licensed brokerage firms and stockbrokers accessible via the FINRA website. We also include our usual Calendar of Upcoming Events as well as the latest enforcement actions and regulatory news.
 
April 2011
In this issue, we report on the conviction and sentencing of Sidney S. Hanson of Charlotte to 22 years in federal prison for his role in a Ponzi scheme that defrauded investors out of approximately $33 million. “What makes this case even more sickening,” said Secretary of State Elaine F. Marshall, “was that the scam was crafted to appeal to victims through their deeply held religious beliefs.” We also report on the conviction and sentencing of Gary Clyde Keever of Charlotte to between 29 to 37 years in prison for his role in a Ponzi scheme that defrauded 25 victims of approximately $636,000. We also report on the Investor Education in Your Workplace™ program, a statewide, online investor education initiative aimed at credit union employees. We include an op-ed piece Secretary Marshall wrote concerning the efforts the Department has undertaken to combat the fraudulent documentation, forgery and false notarization of bank loan documents. Finally, we report on our educational outreach efforts for the previous month, including presentations to senior citizens communities, the U.S. Coast Guard, Ft. Bragg, Wake Forest University, the Raleigh chapter of the National Association of Professional Women, the Union County Women’s Leadership Conference, the North Carolina Academy of Family Physicians, and the North Carolina Association on Aging.
 
February / March 2011
In this issue, we report on the landmark settlement the NC Secretary of State’s Office reached with E*Trade Securities LLC on March 8, 2011, over auction rate securities (ARS) products the company once sold to North Carolina investors. We also report the conviction and sentencing of Bryan Keith Noel of Hendersonville, and Alexander Klosek of Etowah, for their roles in defrauding over 100 clients, mostly retirees. Noel received a federal prison sentence of 25 years and was ordered to pay restitution to his victims in the amount of approximately $11 million. Klosek received a federal prison sentence of more than 7 years and was ordered to repay victims approximately $10.5 million. We report on the seventh educational compliance workshop for state-registered investment advisors. This one was held at the Small Business Center of the Forsyth Technical Community College in Winston-Salem. We also report on outreach efforts to the state’s entrepreneurs and Cooperative Extension Service agents. We also include a warning from the Financial Industry Regulatory Authority (FINRA) about scams that purport to offer investors access to pre-IPO shares of well-known social media companies like Facebook. Also included in this newsletter is a copy of Informational Bulletin NC-IA:2011-01, which reminds North Carolina investment advisers with custody or discretionary authority over client funds of their financial reporting requirements.
 
January 2011
In this issue we informed readers that the Securities Division has physically moved to its new location at 4701 Atlantic Avenue, Suite 116 in Raleigh. We also alerted investors about the new investor education resources that have become available, including a video version of a typical Scam Jam, an iPhone application that allows users to track money earned, spent and saved, and a card game for middle school students that simulates the volatility of the stock market while reinforcing grade-level math skills. We also include information about a Bill of Information that was filed by the U.S. Attorney of the Western District of North Carolina alleging that James W. "Bill" Bailey, Jr., of Asheville had engaged in a $13 million Ponzi scheme to defraud investors between January 2000 and December 2010. The federal Bill of Information alleges that Bailey founded and operated Southern Financial Services, Inc., 1031 Exchange Services, LLC, and AVL Properties, LLC in Asheville and that he fraudulently induced clients to deposit monies and purported to provide asset management, IRA accounts, and wills and trusts services. According to the allegations, Bailey had no license to trade securities and did not invest his clients' money as promised. We also report that the Securities Division has issued a cease and desist order against PMC Strategy, LLC, a Union County company, which offered securities to North Carolina investors beginning in July 2008 despite not being registered with the state to sell securities.