Featured Investigations

Malecki Law is Investigating Possible Claims Against Craig Scott Capital

September 15, 2014 | Malecki Law Team

Malecki Law is investigating possible claims against Craig Scott Capital, based in Long Island, NY.

According to FINRA BrokerCheck, some customers of the firm have recently filed arbitrations related to the conduct of the firm’s brokers alleging “unsuitability, excessive trading and misrepresentation” against the firm. According to his CRD, the firm’s President and CEO, Craig Scott Taddonio, intends to vigorously defend himself in at least two arbitrations. Craig Scott Capital has also recently been the subject of a FINRA regulatory investigation resulting in the firm paying a fine.

Sources have reported that some brokers from Craig Scott Capital are alleged to be “cold-calling” investors with no prior relationship with the firm and soliciting sales of investments that may be unsuitable for the investor. These investments may include non-traded real estate investment trusts (“REITs”).

Leveraged and Inverse ETFs Can Spell Trouble for Investors Who Buy Them and Brokerage Firms Who Sell Them

January 15, 2014 | Malecki Law Team

Just this past week, two brokerages units of Stifel Financial were ordered by the Financial Industry Regulatory Authority (“FINRA”) to pay more than $1 million related to the sale of leveraged and inverse exchange-traded funds (“ETFs”). Of the more than $1 million to be paid, $550,000 comes in the form of a fine to be split by Stifel, Nicolaus & Co., Inc. and Century Securities Associates Inc. The firms were also ordered to pay more than $475,000 in restitution to 65 customers to compensate them for losses incurred on ETF purchases.

According to the Wall Street Journal, FINRA said that some of the brokers who were selling the ETFs did not have a full understanding of the products they were selling, including the risks associated with them.

Brokerage firms can be fined and/or sued when they allow their brokers to sell unsuitable, or inappropriate, investments to customers, especially when the brokers have not been properly trained. Industry regulations require that a broker understand both the product they are selling and the customer to whom they are selling the product. Most importantly a broker must understand the risks of the products being sold and appreciate the customer’s ability (or inability) to tolerate risk. Brokerage firms are also required to train their brokers properly, including what qualifies as a suitable, or appropriate, recommendation to a customer.

Maxwell B. Smith Sentenced for Running a New Jersey Ponzi Scheme: Investors Should Look to His Brokerage Firm for Relief

June 12, 2013 | Malecki Law Team

Maxwell B. Smith was sentenced to serve the next seven years in federal prison for operating a $9 million Ponzi scheme. Maxwell sold investments as a fund that made loans to nursing homes. Smith had previously plead guilty to several counts of mail fraud as well as money laundering.

It is believed that Smith was employed as a financial professional at several financial firms in New Jersey, where he provided financial advice to his clients, many of whom may have lost money to his Ponzi scheme, Health Care Financial Partners (“HCFP”), purportedly a fund with hundreds of millions of dollars in assets. Investors even received a prospectus guaranteeing 7.5% to 9% per year, tax free. Investors could buy bonds in amounts ranging from $25,000 to $300,000.

Investors may not know that broker-dealers, like the ones that it is believed registered Mr. Smith, have a duty to supervise their employees. As a result, in situations like these, investors may be entitled to recover against the financial firms that employed the financial advisor for failing to supervise their employee.

Apple Reverse Convertible Notes Mean Potentially Huge Losses for Investors Who Bought Them From UBS and Other Banks

January 28, 2013 | Malecki Law Team

Those who invested in many of the commonly called “Apple reverse convertibles,” now find themselves facing huge potential losses. But all hope is not lost, as investors may be able to recoup their losses.

The plight of these investors has been well documented recently.

What would you do if your broker tells you that you just bought Apple stock at a price of over $700 a share, even though after this past week’s collapse left the price hovering below $440? Now what would you do if you found out that you wound up with this “bum deal” by buying a product that was issued by your broker’s firm?

Falling Timber: Timberland REIT Reportedly Plunges In Value

December 19, 2012 | Malecki Law Team

As recently reported by InvestmentNews, the estimated value of common stock in real estate investment trust (or REIT) of Wells Timberland REIT, Inc. fell to $6.56 per share. Given the illiquidity of the trust, finding that price in the market may prove difficult. That figure marks a 35% plunge in value since the REIT premiered in 2006 at $10 per share. Unfortunately, such incidents are all too common in a post-bubble real estate industry continuing to face adversity. Many of these incidents have caused substantial losses to investors who invested some or all of their savings in these ventures at the recommendation of their financial advisor.

The trust in question is controlled by Wells Real Estate Funds, an industry giant which has over $11 billion invested in real estate worldwide. Wells management has committed $37 million in preferred equity to this REIT alone, yet the trust currently appears to accrue annual dividends of a mere 1%. In October of 2011, redemption of trust shares was suspended until a new share value could be determined. Beginning next month, shareholders are apparently supposed to have the option of redemption, which will garner 95% of each share’s estimated value, or $6.23.

REITs in many instances can be considered to be high-risk endeavors: appealing for their potential for high gains due to their interest rates, but with equal if not unwarranted potential for resolute failure, and a possible lack of accountability toward investors. Too often, financials advisors describe high-risk investment products like REITs as safe, secured or guaranteed, typically to get the higher commission that these riskier investments pay. Misrepresenting the risk of an investment to a customer like that is against the law and rules under which these professionals work.

CBS Evening News Will Be Featuring the Lawsuit filed by Malecki Law relating to Alleged Ponzi Schemer Robert Van Zandt

June 5, 2012 | Malecki Law Team

Tonight, June 5, 2012, on the 6 O’Clock Evening News on CBS 2 New York, the lawsuit filed by Malecki Law on behalf of forty-three investors in the alleged Ponzi scheme run by Robert Van Zandt will be featured.

This past December, Malecki Law announced the filing of a civil arbitration complaint with the Financial Industry Regulatory Authority against MetLife Securities for more than $4 million on behalf of twenty-four investors. In March, Malecki Law announced that the complaint had been amended to include additional nineteen investors totaling roughly $9.2 million in claims.

The attorneys at Malecki Law continue to take calls and anticipate either adding future victims to the existing claim or commencing a second action, if necessary. We urge anyone with knowledge about the Van Zandt Agency or MetLife Securities supervision (or lack thereof) over the office to contact us. Investors or employees with knowledge of the events at the Van Zandt Agency who seek further information or want to explore their rights should contact Malecki Law by e-mail or phone. Malecki Law has a uniquely diverse background with significant experience representing clients in securities and investment fraud issues and is “AV Rated” by Martindale-Hubbell. Malecki Law hosts a website providing information and resources dedicated to the securities industry: www.AboutSecuritiesLaw.com. Please contact Jenice L. Malecki, Esq., MALECKI LAW, 11 Broadway, Suite 715, New York, NY 10004, Telephone: (212) 943-1233, Facsimile: (212) 943-1238, E-Mail: Jenice@MaleckiLaw.com.

New York Attorney General Announces Civil Suit Against Van Zandt to Recover Funds for Investors

May 21, 2012 | Malecki Law Team

On Thursday May 17, 2012, the New York Attorney General Eric Schneiderman issued a press release announcing the filing of a summons and complaint to recover funds for investors. The filing coincided with an earlier press release disclosing that Mr. Robert (Bob) H. Van Zandt had been indicted and arrested for criminal charges stemming from some of the same activity that formed the factual basis for the civil filing.

The New York Attorney General’s civil filing noted that Mr. Van Zandt issued promissory notes totaling over $35 million to over 250 investors, most of whom were unsophisticated and invested the bulk of their life savings in the scheme. The filing alleged that these promissory notes were securities sales that were not properly registered with the requisite governmental offices in New York State and, while stated to be suitable for self-directed IRAs, were at best “highly speculative.”

The civil filing also alleged that while the Van Zandt Agency, by Mr. Van Zandt, sold the promissory notes with the understanding that the money collected would be used to fund real estate purchases and real estate development, in reality bank loans were used to fund certain purchases and construction, while other projects were never even commenced. The civil filing further alleged that no investors received security in the form of mortgages or otherwise, and that the money was converted for personal use or used to pay interest claims of other investors, essentially a Ponzi scheme.

New York Attorney General Announces the Arrest of Robert Van Zandt

May 14, 2012 | Malecki Law Team

The New York Attorney General Eric T. Schneiderman announced today the unsealing of a 35-count indictment of and the arrest of Robert H. Van Zandt, a Bronx tax preparer who for years sold promissory notes in alleged real estate investments “guaranteeing” high rates of interest return. He sold these promissory notes out of his tax preparation business, the Van Zandt Agency, while he was licensed by various broker-dealers to sell securities.

Malecki Law currently represents a large group of investors who purchased promissory notes totaling almost $10 million in aggregate from Mr. Van Zandt in an arbitration before the Financial Industry Regulatory Authority (“FINRA“), the independent regulator of securities companies. The arbitration is pending against MetLife Securities, Inc., a broker-dealer who employed Mr. Van Zandt during a period in his career. While investors purchased the promissory notes directly from Robert Van Zandt and through the Van Zandt Agency, he was then licensed by MetLife Securities, Inc. to sell securities, and MetLife was required to perform certain supervisory and audit duties as a result of that employment relationship.

Malecki Law is also investigating the potential for other actions against other broker-dealers arising from Mr. Van Zandt’s alleged real estate investments.

Malecki Law Announces Investigation Into the Unsuitable Sale of KBS Property Trust REIT to Investors

April 2, 2012 | Malecki Law Team

Malecki Law is investigating possible unsuitability claims against stock brokers and financial advisors who sold shares of KBS REIT I to investors. REITs are illiquid real estate investments, which may be unsuitable for both unsophisticated and elderly customers.

Just recently, KBS informed investors that it would be dropping its share price a whopping 29% from $7.32 to $5.16. This represents a nearly 50% drop from its original sale price of $10. For investors who bought shares of KBS REIT I as part of their retirement savings, this drop may be too much to handle.

In addition to the drop in share price, KBS has also informed investors that it will cease payment of its dividend. Since, many financial advisors sell REITs like KBS REIT I to retired customers as a way to obtain steady income, this announcement has to potential to be devastating to a retiree depending on that income.

Malecki Law Announces Investigation Into Credit Suisse’s TVIX Exchange Traded Notes

March 23, 2012 | Nick Curley

Malecki Law is currently investigating the potential for recovery of losses from VelocityShares Daily 2x VIX Short-Term ETNb (TVIX), an exchange-traded note issued by Credit Suisse. The product is typically utilized to hedge against market decline, or as a presumptive bet on the decline of stocks. It appear that Credit Suisse ceased creation of new units in February, 2012, until March 22nd, when the company announced a reopened limited issuance of the product. Prior to this reopening, it seems demand for the product greatly outweighed supply. Many market observers predicted that this reopening would cause the value of the notes to plummet, causing TVIX’s premium to fade. It looks as though shares of TVIX had lost as much as 50% of their value in less than two days following Suisse’s announced reopening.

While Credit Suisse cited internal limits to the size of the product as the reason for its initial closure, many have speculated that the action of short sellers also played a role, as well as something that may have changed within the company as to how Suisse markets and packages the product. “Short sellers may be accelerating bets against TVIX today on speculation Credit Suisse will permit issuance of more shares,” said WallachBeth Capital’s Chris Hempstead.

It is the right of any and all investors who believe they may have suffered losses as a result of recommendations of their financial advisor to contact our offices to explore their legal rights and options. If you or a family member invested in TVIX exchange traded notes issued by Credit Suisse, contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.