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Malecki Law takes a proactive and informed approach to the financial news of today: actively engaging in fact-finding analysis on prospective cases from around the world. Our thorough knowledge of securities law’s history and fine points makes us ideal consultants for investors who have suffered losses due to misadvice from their broker or other financial counsel. Information on a selection of funds and companies currently under investigation by Malecki Law can be found below. Our pursuit of excellence is constant, but our opportunities to make lasting positive change to the securities industry begin and end with determined clients who seek justice.

Malecki Law is currently investigating allegations against Carr Miller Capital LLC, a New Jersey investment firm, accused in a lawsuit by the state Attorney General’s office of creating a Ponzi scheme that defrauded investors of over $40 million. Company CEO Carr Miller has since been banned from practicing within the securities industry by state legislators.

Companies who shared investments with Carr Miller have been named as defendants. Among those cited is energy company Indigo-Energy (“Indigo”), a group in which Carr Miller had previously invested. Indigo has been named in the lawsuit against Carr Miller because Carr Miller invested in the energy company, who was then deemed by the state to be unjustly enhanced by Carr Miller’s money, obtained through illegal actions taken by the firm.

Malecki Law takes a proactive and informed approach to the financial news of today: actively engaging in fact-finding analysis on prospective cases from around the world. Our thorough knowledge of securities law’s history and fine points makes us ideal consultants for investors who have suffered losses due to misadvice from their broker or other financial counsel. Information on a selection of funds and companies currently under investigation by Malecki Law can be found below. Our pursuit of excellence is constant, but our opportunities to make lasting positive change to the securities industry begin and end with determined clients who seek justice.

Malecki Law is investigating possible unsuitability claims against David Lerner Associates (DLA), a New York based real estate firm based in Syosset, NY. In May of 2011, FINRA regulators accused the brokerage entity of selling shares in illiquid real estate investment trusts, or REITs, to unsophisticated and elderly customers.

In addition, FINRA’s suit against the firm argues that DLA’s trusts were unsuitable for the consumer to whom the group was targeting. It is alleged that Lerner provided misleading information that failed to show that distributions far exceeded income and were financed by debt.

Malecki Law takes a proactive and informed approach to the financial news of today: actively engaging in fact-finding analysis on prospective cases from around the world. Our thorough knowledge of securities law’s history and fine points makes us ideal consultants for investors who have suffered losses due to misadvice from their broker or other financial counsel. Information on a selection of funds and companies currently under investigation by Malecki Law can be found below. Our pursuit of excellence is constant, but our opportunities to make lasting positive change to the securities industry begin and end with determined clients who seek justice.

Malecki Law is currently investigating Financial Industry Regulatory Authority (FINRA) brokerage firms who have advised customers to purchase a private placement called LaeRoc Income Funds, LP. LaeRoc is a real estate investment firm started in 1988, creating and owning property throughout the United States. Among those who sold the funds to investors are LPL Financial and Commonwealth Financial Network. We believe these investments were often marketed as modest, fixed income products.

The LaeRoc 2005-2006 Income Fund, LP is presumed to be at least $49 million in debt and presently aims to raise $12 million to $15 million, with lenders threatening foreclosure. The Fund currently owes $105 million dollars in total mortgage debt. Such an urgent pursuit of fast cash is a foreboding sign for investors. Malecki Law is researching a potential failure on the part of brokerage firms to properly disclose risk.

In a follow up to our recent critique of dividing defrauded consumers into “net winners” and “net losers” comes a decision from U.S. District Judge Jed Rakoff, who has dismissed Bernie Madoff trustee Irving Picard’s claims filed to regain nearly $1 billion from Fred Wilpon and Saul Katz, the owners of baseball’s New York Mets. The decision may potentially limit Picard’s future chances of recouping investors’ initial investments with Madoff, in what analysts have dubbed “clawback suits” filed by the trustee against the defrauded.

The judge’s decision illustrates a difference between U.S. bankruptcy law and securities law regarding when investors should return money previously received from their broker. A thorough, easy-to-read explanation of fraud can be found on our home site. For New York law, that period spans up to six years prior to a broker’s bankruptcy, while Federal law caps that limit at only two years. What Picard will be able to recoup depends greatly upon whether he will continue to be held to Federal standards. Several district court judges have in recent months sided with Madoff investors’ requests to move cases out of bankruptcy court, a setting that typically favors the trustee.

What we can all learn from these rulings is that where and when an investment is made – as well as where and when any necessary litigation takes place – can be just as important as the venture you’ve chosen to pursue. For one, it’s notable that our national standard for “clawback” measures is more favorable than that of New York, a state housing Wall Street and an immense amount of high stakes real estate, as well as many entertainment and banking endeavors. Clearly, it pays for investors to be informed about their state’s “clawback” legislature: for those of us engaging the market longterm, timing is everything, and how recently you’ve been the victim of fraud sets crucial perimeters.

There’s an old pun making a comeback among New York securities lawyers: “Don’t count your check-ins before they’re cashed.” The divide between so called “net winners” and “net losers” is a hot topic, particularly with regard to the defrauded victims of vilified Ponzi schemer Bernard Madoff. A thorough explanation of affinity fraud can be found in our Investors section, with a set of Ponzi scheme red flags available here from Investor.gov.

In August, the U.S. Second Circuit Court of Appeals upheld Madoff trustee Irving Picard’s decision to award upfront recovery payments of as much as $500,000 solely to the scheme’s “net losers”: investors whose withdrawals from Madoff’s fund did not match their initial investment. “Net winners” – those who withdrew more than their initial entry into the fund – seek the same recovery, but have been denied by Picard in a motion that has now held up in court.

Branding either party winners or losers is problematic, and discredits the fact that all of these investors suffered and were betrayed by the same scheme. Moreover, a precedent was set favoring “net winner” restitution in the case of Randall v. Loftsgaarden 478 U.S. 647 (1986), in which the Supreme Court ruled that “[t]his deterrent purpose is ill-served by a too rigid insistence on limiting plaintiffs to recovery of their ‘net economic loss'”. A 2001 ruling in California Ironworkers Field Pension Trust v. Loomis Sayles, 259 F.3d 1036, (9th Cir. 2001) binds respondents to an “Anti-Netting Rule”, concluding that gains in one investment do not offset losses in another. Why then might Picard’s whims prove to be, as one Wall Street Journal headline wonders, “the Final Word on This Issue?

In-cred-i-ble: Adjective 1. too improbable to be believed; 2. amazing, extraordinary; Merriam-Webster DictionaryWhen I was a student downtown at New York Law School, I lived on Maiden Lane at Broadway, a street that leads to where the Twin Towers stood, just one block away. I always considered myself a “maiden of Maiden Lane” and the Twin Towers were like the big protective brothers I never had. Let’s face it, the Twin Towers were incredible. I would see the Twin Towers from a distance and know exactly where I lived and where we were going. I would go to the Twin Towers from time to time, which had a shopping plaza, when I lived there. After I graduated law school and moved away, I frequently returned to the Twin Towers, as I had become a securities lawyer and the SEC, NYSE and Commodities Exchange were all housed there. All but about three years of my schooling and practice as a lawyer were spent in the financial district, my work home for sure. At the time of the first attack in 1993, I was both a lawyer and an actress. At night, for fun, I would act in a troupe which had a member that also worked at the Commodities Exchange. I heard my red-haired friend’s story about his evacuation and the crumbling (but standing) brick and mortar. Although I was frequently in the building, It would have been incredible to me if you would have told me that I would have been caught up in another attack there, or that there would even be another attack. By the second attack, September 11, 2001, I had started my own private practice a few years prior (after working for others in the neighborhood). At the time, I had a smaller office on the 4th floor at 11 Broadway (where I still incredibly have my office today) and, in 2001, my back windows faced the direction of the Twin Towers. On September 11, 2001, I was scheduled for a hearing at the National Association of Securities Dealers, Inc., now named the Financial Regulatory Authority. My adversary, from Texas, was staying at the Millennium Hotel just across from the Twin Towers. I was representing a woman who was in her 60s and in my office very early. I wore a black and white suit and the black shoes pictured here. I felt something like the earthquake we had just a few weeks ago and in my old building with large old windows, the windows bowed in just slightly, but significantly in and of itself. I (stupidly) rushed to the window and saw people running towards the water. In the past, I had a dream about a plane going into the water off the tip of the city, so that’s what I thought had happened. Within minutes, my sister and my mother phoned. We had a conference call and one told me not to leave the building, the other told me to get out as soon as I could. In true fashion, I did a little of each. I stayed until my older client got there, tried to call the NASD at her request – but all lines were down. The client insisted that we go to the NASD and see if the hearing was going forward. I agreed to walk with her to the building. When my client and I got outside, I saw the First Tower on fire. The securities attorney in me thought – “wow, look at those SEC investigation files burn.” Of course, I still had no idea what really happened, whether people were in the Towers or were evacuated. My client and I walked to the NASD building, which was then on Whitehall Street. No one was permitted up. She told me she was going on the subway and asked me to join her. I told her, respectfully, that there was not a chance I was going on the subway, I would walk home. At that time, I was living in Kip’s Bay, a neighborhood in the 30s. I received conflicting accounts of what was happening: a plane hit the building, there’s a war and around the country planes are going down, there are cars smashing all over the place in the City, there was a fire. I had no access to television, I was escorting a client, I wanted to get home as soon as possible and so I really did not know what was happening. I was not too far from the water at that point and I thought, well, if something really bad happens, I can jump in the water, so I headed for the water’s side. I made it to my beloved Maiden Lane, but was down near Water Street when the tower fell. I saw what seemed like a movie image coming at me, dust clouds higher than the highest building. I had no idea what the cloud was. Was I going to die in a bombing from some gas related death? It was not incredible at that point to think I might not make it. I had no idea what was really happening. I ran screaming certain expletives and tried to get to the water, as I planned, until I could not see anymore, then I had to stand in place; for 15-20 minutes I could not see my own hand in front of me. I was covered in the plumb and I used my suit jacket to protect my breathing. It was truly incredible. On my journey home, I heard more conflicting stories about what was happening. I started to walk home up the FDR Highway and, of course, had to take my black pumps off. I walked home barefoot, as many people did. While I was a bit dusty and shaken, there were people on the road so covered in dust, they truly looked like walking statues. I was lucky and I knew it. The fact that I was alive and breathing was a gift. On another day, I could have been right there, in the tower at the SEC. Early on, I heard someone calling my name. It was Gerard, a classmate from Manhattanville College. As we briefly reacquainted, he told me that “Shorty” worked at Cantor Fitzgerald. Within the next few minutes, the Second Tower fell and, sadly, Shorty, a family man with children, fell with it. He was the first loss I learned about. Months later, my mother was carrying around a picture of him to give me. She had no idea he had died in the Attack. It had fallen out of my closet at home. Thousands of people of all walks of life walked up the FDR and across the Brooklyn Bridge that day. It had rained just before this all happened, so people walked on pavement, in dirt and in puddles – many with their suit pants rolled up. I remember being angry, being upset with President Bush – whom I believed would put us in a war within 2 years of his election (I recall specifically voicing that to a cab driver, of all people), but here we were only 1 year out. Regardless, I wanted him to get these people. When I got home, my sister and my mother called again. I was pretty much in a daze at this point. It was surreal. My sister, very practically, told me to take a shower because I had been in so much dust. It was a good idea, I followed her instruction. Other friends and family called, very heartwarming. In fact, I had fairly recently joined the Public Investors Arbitration Bar Association, a national organization, and people around the country were emailing to make sure I was ok. I was very thankful so many people cared. I then received a call from Helene, a friend who lived nearby. Helene and I were both working that day in the ground zero area. We met at a local bar, watched the news together. Although no one wanted to say very much, as no one knew what to say, no one wanted to be alone – particularly not if you were there. A client of mine ran into the disaster to save a young boy. People I knew saw people jump to their deaths from top of the tower. They told me, but never in detail. No one could truly describe it – and no one wanted to even try. Just the thought of what the jumpers were feeling was sadder than words could convey. I feel lucky that I did not see that myself. The bar Helene and I met at had a big open wall in the front facing Second Avenue. The bar was pretty full every day, we all watched the fire trucks from all the Long Island towns race down Second Avenue from the tunnel to try to recover people. Transportation off of Manhattan Island was not an option in the days that followed and everyone wanted to stay near their homes, as you had no idea what would happen next or whether if you could make it somewhere, whether you would be able to make it back home – or be killed in transit – as there was speculation about bridges, tunnels and transportation hubs being hit. That night and for many sad weeks that followed, my home was filled by the sound of blood trucks running 24/7 to keep the blood cold. I lived near NYU Medical Center and as far as I could see out my window just off Second Avenue were 18 wheel trucks filled with blood. They never moved, as they never were used. Aside from the lingering injuries, people either got out and were pretty ok or died, there was no grand scale recovery. It was very sad to hear those trucks, just sitting there. People were turned away who wanted to donate blood and tents set up to do emergency medical work were empty. The City was pretty bleak for a long time thereafter. The site itself was unimaginable. The jutting metal and people working, exposed with no masks in the stench that lasted for a time that felt like forever. There has never been any doubt in my mind that the greatest, bravest, best people on earth were at the site trying to recover people and help us get our dignity back. They were each more than just a hero. My office was shut done for weeks, as I was in the restricted Ground Zero zone. Amazingly, after phone lines went back up, within days of the attack, I was getting subpoenas from my adversaries in mid-town on a home fax machine I set up. Even people in NYC who were not down there and not close to it did not feel it like we did, and certainly not for as long as we did watching the trucks and smelling the smell. It was incredible, after all. In the days after the attack, people communicated to try to go down there together to gather what we needed from our offices. It was a bit daunting. Eugenie, another lawyer in my office, gave me a mask to wear downtown when we met up to go down there. I could not bring myself to really use it. After about three weeks, my office opened, but on restricted hours for about three months thereafter. Friends of mine at American Express in the World Financial Center were carted off on busses to Parsipanny, New Jersey to work. There were military squads with machine guns all over downtown, literally camped there, in tents. You needed to show proof of living or working there to get in certain areas. That went on for a very long time and the men with machine guns were around for years. Tourists would ask to have their picture taken, smiling in front of the rubble. I would refuse. It was a huge murder scene. Every day that I was down there for at least six months, the air smelled thick of death and toxins. For what seemed to be an incredibly long time, I watched 18 wheel truck after 18 wheel truck cart away pieces of the Twin Towers to Staten Island down Broadway. The task of removing the Twin Towers rubble seemed impossible. Every day that I arrived at my office, I had to pry papers apart from one another, as any papers left out on my desk got a sticky coating overnight. Every day I cleaned it off and ignored it, just wanting to go on with life as if things were normal – they were not. A more rational person would have just gotten a new office, even for a while, but I refused to give in to the destruction that was intended and I went into my office in solidarity with my country – that is what I felt. After all, there were American flags waving everywhere those days. The subway was the most silent I had ever known it to be. It was pure sadness and fear that more terror awaited us. Remember all the alert codes and stories at the time were quite different than today’s news. Everyone was calling around to make sure that people were ok. I learned not long thereafter of other people that died. My friend’s new boyfriend that we had just spent that Labor Day weekend prior to the disaster with at a wedding for my friend Marci in San Francisco died in the Twin Towers. A woman I worked with, Susan, died in the Twin Towers. I learned of her death when my friend Lawrence, who worked at the NASD, called me. Oddly, her Rolodex card (yes, we still used Rolodex then) had fallen out in Lawrence’s office (which was evacuated) and onto the floor, much like my college friend’s picture from my old closet. I also found out that the brother of a woman I went to law school with was one of the men who stopped the terrorists on Flight 93, but lost his life in that plane. At some point, things got back to “normal”, but downtown was forever changed, as was I and many other people. Now tourists come to the Financial District to see where it all happened and more will come now with the Memorial. The neighborhood has become a neighborhood again, not just a work neighborhood, but also residential, unlike when I was a “maiden of Maiden Lane.” I now have a son, who is incredible, and every day, he and I drive to daycare/work together. Every day we pass by the site exactly on the side of one of the new Towers being erected on the way in and different Towers on the way home. My son loves the construction trucks, of course. I am glad that finally there will be life again on the ground where my big brothers, the Twin Towers, stood. One day, I will explain to him about the best people on earth and the worst day in New York. I will show him the shoes I wore and swore I would never wear again, literally or proverbially, which I put in a box with the articles of the day and the suit I wore. I am watching the workers, who see me drive by everyday, they don’t know my story. I am watching the trees and the water, they don’t know how welcome they are. I am watching the tourists, they don’t know needed they are. I am watching the businesses and politicians, they better know how much life depends upon them, their honesty, integrity and honor. I am watching, for life, in love of life and in love of my City and my son. In my heart and in my mind, it was incredible, in a terrible way, but in my same heart and in my same mind, we are all incredible in a wonderful way, every day. In respect of the day, remember to celebrate life, every day, because good or bad, the incredible is possible.

New York securities law saw quite the news day, as the Financial Industry Regulatory Authority (FINRA) issued a news release on September 7, 2011 announcing fines against five Broker-Dealers, three of them based in New York, for mischaracterizing fees charged to customers. The three New York based firms were John Thomas Financial of New York, NY, A&F Financial Securities, Inc. of Syosset, NY and Salomon Whitney, LLC of Babylon Village, NY. FINRA alleged that the firms understated commissions but charged additional handling fees to make up transaction based income for the firm. FINRA found that by structuring their fees this way, the firms ended up charging fees significantly higher than the actual cost of the services the firms provided.

In making their findings, FINRA reiterated that broker-dealers must accurately disclose commissions earned. By settling these charges with FINRA, the firms did not admit or deny wrongdoing, but they did consent to the entry of FINRA’s findings and also agreed to implement actions sufficient to remedy the handling-fees violations.

Such mischaracterization of handling-fees is one example of how broker-dealers can put their own interests ahead of the interests of their clients, and represent what is essentially securities fraud. If you held an account with one of these firms or you think your broker-dealer may have charged fees in excess of what they disclosed to you, your entire portfolio may need a thorough review for suitability.

In rough economic times such as these, many investors have seen their accounts suffer large losses. As New York securities lawyers, we’ve seen some investors’ accounts lose 25-50% over the course of a few months or years, while others have seen their accounts lose such large amounts seemingly overnight. A large drop in account value is unsettling for every investor, but for those nearing retirement or senior citizens living off their savings, large losses are extremely alarming and can be devestating. Regardless of their age or situation, investors who have suffered large losses often find themselves asking the same questions, “Is my account down because of the market, or is it something else?”

Investors who are approaching retirement or who are already retired are typically risk-averse – i.e. willing to accept lower returns to avoid the possibility of devastating losses. However, many of these investors find themselves being sold on “sure thing,” “big winner,” “can’t lose,” and “have your cake and eat it too” investment strategies that seem, and in fact are, too good to be true. Those who buy into these false promises can find themselves unknowingly invested in products and strategies that are much riskier than what they wanted, and most importantly, what they should have been invested in. Unfortunately, good times in the market can hide these risks from the average investor. It is not until a downswing in the market that these risks come to light, often taking the form of large, unexpected and crippling losses.

Many people who want to invest seek out professional guidance in handling their savings and their investments because they feel safer in the hands of professionals whom they trust and whom they believe are looking out for their best interests. Unfortunately, this trust can be abused and investors often find themselves in accounts that are not suitable for their financial needs and the amount of risk they are willing to take with their investments.

Malecki Law, a New York securities law firm based in Manhattan, is currently investigating claims against IRA Services Trust Company and Fiserv, Inc. arising out of investments solicited and promissory notes issued through the Van Zandt Agency in relation to real estate investments in the Bronx, New York and elsewhere.

The Attorney General of the State of New York is currently investigating the practices of the Van Zandts and on April 6, 2011, filed an application in the Supreme Court of the State of New York for an order of discovery and preliminary injunction against the Van Zandts and other related agencies.

Based on the initial inquiry of the securities fraud lawyers of Malecki Law and the Attorney General’s investigation, there are questions about whether or not the Van Zandt Agency broke the law by engaging in the fraudulent issuance, promotion offer and sale of securities to the public in the State of New York. It is believed that hundreds and possibly thousands of investors may have lost money invested with the Van Zandts.

The talk among New York securities lawyers this week was all about the Financial Industry Regulatory Authority (FINRA) release of Regulatory Notice 11-39 addressing business use of social media website in the wake of surging popularity of social media tools such as Facebook and Google+. These social media tools make connecting with friends, colleagues and third-parties easy, but also raise novel questions related to the extent to which associated persons may use these sites for business use and registered principals must supervise such use.

Securities Exchange Act Rule 17a-4(b)(4), which requires the retention of copies of communications between members, brokers or dealers and the public of “business as such,” underlies Regulatory Notice 11-39. Thus, a firm’s or an associated person’s communications with the public through social media posts may require pre-approval by the firm and/or registered principal, and be subject to regulation by FINRA, depending on whether the communication is related to the firm’s “business as such” and is “static” as opposed to “interactive.” Generally, all communications related to a firm’s business as such must be recorded and preserved, while all static posting is deemed an advertisement requiring the firm’s pre-approval under NASD Rule 2210.

Regulatory Notice 11-39 begins to address the grey area of posting to message boards. Associated persons, be they advertising in the first place or responding to questions via such message boards, are limited to what they can say and claim. Thus, postings in static forums or blogs on websites would require pre-approval of all statements made relating to the firm’s business.

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