FinancialCounsel

SNSFE Investigating Robert Lane, Wealth Pools International Inc., And Recruit For Wealth Inc. For Fraudulent Global Pyramid Scheme

The Securities and Exchange Commission has halted a fraudulent global pyramid scheme praying on the Hispanic community.  The SEC announced that in early December it filed an emergency action against Robert Lane, Wealth Pools International, Inc., and Recruit for Wealth, Inc., charging them with the fraudulent offer and sale of unregistered securities in the form of "Associate" memberships in an enterprise called Wealth Pools.  The offering began in 2005 when the defendants claim to have raised over $132 million in 2007 alone, according to the SEC's complaint.

The SEC alleges in its complaint that Wealth Pools purports to be a multi-level marketing company primarily selling an English and Spanish language tutorial DVD called Talk-N-Tutor through a network of sales Associates around the world.  The DVD is, in reality, a front for Wealth Pool's true product - an investment in one or more "pools" that offer investors an opportunity to receive passive income through the efforts of others to recruit new investors, according to the complaint.  The defendants enticed investors to purchase thousands of DVDs by falsely promising them that they would earn income for life with no further effort, according to the SEC's complaint.  The SEC also charged the defendants with failing to disclose, among other things, that Wealth Pools is a fraudulent pyramid scheme, that each new investor dilutes all investors' returns, and that Lane's previous attempt at a similar scheme resulted in bankruptcy.

In early December, upon motion by the SEC, a U.S. District Judge for the Middle District of Florida issued an order temporarily restraining the defendants and freezing their assets, as well as the assets of other defendants.  SNSFE is investigating this fraudulent scheme and would welcome comments or information.

SNSFE Continues Probe Of Edward May and E-M Management Co. As SEC Files Fraud Charges For $250 Million Fraud

Edward May and E-M Management Co. are back in the news.  The Securities and Exchange Commission filed charges stemming from a $250 million offering fraud that involved phony Las Vegas casino and resort telecommunications deals and victimized as many as 1,200 investors, many of whom were senior citizens. 

The SEC's action charges Detroit-area resident Edward May and E-M Management Co. LLC with selling investors shares of limited liability companies that they claimed had received revenues from telecommunications equipment and services contracts with hotels, casinos, resorts and similar establishments, many of which were purportedly located in Las Vegas.  In fact, no such contracts ever existed.   To perpetrate their fraudulent scheme, May and E-M relied on a network of individuals, some of whom organized "investment seminars" to entice investors to invest with E-M.

This scheme was perpetrated between 1998 and July 2007 according to the SEC.  SNSFE attorneys continue to investigate and would welcome calls discussing this matter.

Securities Regulator Makes Protection Of Senior/Retiree Investors A High Priority

Senior investors, as well as Baby Boomers who are retired or who are approaching retirement, should take some comfort from a recent notice to financial services firms, Regulatory Notice 07-43.  The Financial Industry Regulatory Authority (FINRA) states that the purpose of the notice is "to urge firms to review and, when appropriate, enhance their policies and procedures for complying with FINRA sales practice rules, as well as other applicable laws, regulations and ethical principles, in light of the special issues that are common to many senior investors."

Why is FINRA concerned?  The concern stems from demographics - by 2030, almost 1 out of every 5 Americans will be 65 years old or older.  Additionally, the concern is that retirees will live longer, yet fewer and fewer of them will be able to rely on traditional corporate pension plans to fund their retirement.  Therefore, FINRA states that  "the financial decisions made by those who are at or nearing retirement are more important than ever before."

Moreover, FINRA emphasizes that although it does not have "special rules" in place for seniors/retirees, financial services firms especially must be careful when dealing with seniors/retirees.  In executing their duties, the notice provides that "age and life stage (whether pre-retired, semi-retired or retired) can be important factors, and firms should make sure that the procedures they have in place take these considerations into account where appropriate."  Suitability of recommendations and communications aimed at older investors are "of particular concern."  Let's examine FINRA's guidance regarding suitability of investment recommendations...

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