Friday, March 30, 2012

Mario Massillamany Discusses Receiver in Keenan Hauke Ponzi Scheme Case Appointing Starr Austen & Miller as Counsel to Recover Additional Funds for Receivership Estate

Mario Massillamany of the Indiana law firm of Starr, Austen & Miller, LLP, announced today that the judge has allowed the Receiver in the case of a prominent Indiana money manager, Keenan R. Hauke, who late last year plead guilty to a large Ponzi scheme, to appoint Starr Austen & Miller’s attorneys to initiate litigation to “recover additional funds for the Receivership estate.”


Mario Massillamany
Mario Massillamany
Fishers, Indiana-Mario Massillamany of the Indiana law firm of Starr, Austen & Miller, LLP, announced today that the judge has allowed the Receiver in the case of a prominent Indiana money manager, Keenan R. Hauke, who late last year plead guilty to a large Ponzi scheme, to appoint Starr Austen & Miller’s attorneys to initiate litigation to “recover additional funds for the Receivership estate.” In the case entitled “State of Indiana et al., v. Keenan R. Hauke, et al.”, in Hamilton County Superior Court 4 in Indiana, under cause number 29D04-1104-PL-003478, the Receiver, William E. Wendling, Jr., has been tasked with marshaling assets to reduce investor losses.

According to court documents, the discovery of this Ponzi scheme happened in April 2011, when a former employee of Hauke reported his concerns about Hauke to the Indiana Securities Commission. The Commission acted quickly in investigating and then bringing a complaint against Hauke, and getting the court to freeze the assets of the former Fishers money manager and hedge fund operator. Hauke, who was the CEO of Samex Capital Advisors, LLC, had been previously kept a high profile, writing a regular column in the Indianapolis Business Journal, and being a frequent guest on cable networks and local TV shows, such as CNBC and Fox Business News, discussing financial issues.

While being very vocal within the financial community Hauke was at the same time involved in an elaborate Ponzi scheme involving many of his client investors, according to court documents. In this Ponzi scheme Hauke, who had great losses for his investors in a large Michigan real estate deal, began to solicit money from new clients, and he used most of this money to pay off previous investors. In addition, he converted some of these funds for his own uses, including paying off his mortgage, paying taxes and purchasing property. He also created a false trail of documents to deceive his investors about what was really happening to their retirement and life savings.

Court documents state that in December 2011 Hauke pleaded guilty in federal court to a single count of securities fraud, in which he admitted to defrauding 67 investors of over $7 million from 2004-2011. A sentencing hearing was held for him on March 23, 2012 in federal court, in the Southern District of Indiana, and he was sentenced to ten years and one month in jail.

Although the federal criminal case is now concluded, the Indiana state case continues against Hauke. According to court documents, one of the goals of this continued litigation is to try to recover as much of the Ponzi scheme victims’ money as possible, since on average each investor affected lost over $100,000, with some more, and some less because of Hauke’s misdeeds. Therefore, the Court appointed William E. Wendling, Jr. as a Receiver in June 2011, to take control over assets held by Hauke. He was tasked with establishing a claims process to distribute funds to shareholders and partners, and also creating a restitution fund for investors.

A part of gathering these assets for the estate is to gather funds from those who received them with knowledge of the Ponzi scheme, which can sometimes require the initiation of litigation. Therefore, on March 19, 2012, a judge in Hamilton County, Indiana, granted the Receiver’s petition to retain Starr Austen & Miller to initiate litigation on the Receiver’s behalf. Specifically, the Court ordered that “The Receiver may initiate litigation to recover profits received by investors, fund received by investors with knowledge or information of the Ponzi scheme, and any litigation investigated and believed viable by the Receiver to recover additional funds for the Receivership estate.”

Starr Austen’s securities arbitration attorney, Scott Starr, has stated, “Now that we’ve been appointed as counsel for the Receiver we’ll begin the task of investigation and initiation of litigation. We’ll do our best to discover and recover as much money as possible for the Receivership estate, which will, in turn, help reduce investor losses from this Ponzi scheme which has harmed so many innocent victims.”
Currently, Starr, Austen & Miller LLP has pending litigation against DuPont for the alleged environmental damages caused by their Imprelis product in the case entitled as Shomo v. E.I. du Pont de Nemours & Company (Case Number 1:11-00633) in the Eastern District Court of Pennsylvania. Starr, Austen & Miller LLP handles stock broker fraud cases, truck accident cases, and multimillion dollar, nationwide class actions. Mario Massillamany hosts a live chat session every Wednesday at 5pm to help people understand their rights.

http://www.prweb.com/releases/2012/3/prweb9346623.htm#

Wednesday, March 28, 2012

Tips to Protect Yourself and Your Family Against Internet Fraud

Mario Massillamany's Tips to Prevent Internet Fraud:

Tips for Avoiding Internet Auction Fraud:

  • Understand as much as possible about how the auction works, what your obligations are as a buyer, and what the seller’s obligations are before you bid.
  • Find out what actions the website/company takes if a problem occurs and consider insuring the transaction and shipment.
  • Learn as much as possible about the seller, especially if the only information you have is an e-mail address.  If it is a business, check the Better Business Bureau where the seller/business is located.
  • Examine the feedback on the seller.
  • Determine what method of payment the seller is asking from the buyer and where he/she is asking to send payment.
  • If possible, purchase items online using your credit card, because you can often dispute the charges if something goes wrong.
  • Be cautious when dealing with sellers outside the United States.  If a problem occurs with the auction transaction, it could be much more difficult to rectify.
  • Ask the seller about when delivery can be expected and whether the merchandise is covered by a warranty or can be exchanged if there is a problem.
  • Make sure there are no unexpected costs, including whether shipping and handling is included in the auction price.
  • There should be no reason to give out your social security number or driver’s license number to the seller.
Tips for Avoiding Non-Delivery of Merchandise:

  • Make sure you are purchasing merchandise from a reputable source.
  • Do your homework on the individual or company to ensure that they are legitimate.
  • Obtain a physical address rather than simply a post office box and a telephone number, and call the seller to see if the telephone number is correct and working.
  • Send an e-mail to the seller to make sure the e-mail address is active, and be wary of those that utilize free e-mail services where a credit card wasn’t required to open the account.
  • Consider not purchasing from sellers who won’t provide you with this type of information.
  • Check with the Better Business Bureau from the seller’s area.
  • Check out other websites regarding this person/company.
  • Don’t judge a person or company by their website.  Flashy websites can be set up quickly.
  • Be cautious when responding to special investment offers, especially through unsolicited e-mail.
  • Be cautious when dealing with individuals/companies from outside your own country.
  • Inquire about returns and warranties.
  • If possible, purchase items online using your credit card, because you can often dispute the charges if something goes wrong.
  • Make sure the transaction is secure when you electronically send your credit card numbers.
  • Consider using an escrow or alternate payment service
Tips for Avoiding Credit Card Fraud:

  • Don’t give out your credit card number online unless the site is a secure and reputable.  Sometimes a tiny icon of a padlock appears to symbolize a higher level of security to transmit data.  This icon is not a guarantee of a secure site, but provides some assurance.
  • Don’t trust a site just because it claims to be secure.
  • Before using the site, check out the security/encryption software it uses.
  • Make sure you are purchasing merchandise from a reputable source.
  • Do your homework on the individual or company to ensure that they are legitimate.
  • Obtain a physical address rather than simply a post office box and a telephone number, and call the seller to see if the telephone number is correct and working.
  • Send an e-mail to the seller to make sure the e-mail address is active, and be wary of those that utilize free e-mail services where a credit card wasn’t required to open the account.
  • Consider not purchasing from sellers who won’t provide you with this type of information.
  • Check with the Better Business Bureau from the seller’s area.
  • Check out other websites regarding this person/company.
  • Don’t judge a person or company by their website.  Flashy websites can be set up quickly.
  • Be cautious when responding to special investment offers, especially through unsolicited e-mail.
  • Be cautious when dealing with individuals/companies from outside your own country.
  • If possible, purchase items online using your credit card, because you can often dispute the charges if something goes wrong.
  • Make sure the transaction is secure when you electronically send your credit card number.
  • Keep a list of all your credit cards and account information along with the card issuer’s  contact information.  If anything looks suspicious or you lose your credit card(s), contact the card issuer immediately.
Tips for Avoiding Investment Fraud:

  • Don’t judge a person or company by their website.  Flashy websites can be set up quickly.
  • Don’t invest in anything you are not absolutely sure about.  Do your homework on the investment and the company to ensure that they are legitimate.
  • Check out other websites regarding this person/company.
  • Be cautious when responding to special investment offers, especially through unsolicited e-mail.
  • Be cautious when dealing with individuals/companies from outside your own country.
  • Inquire about all the terms and conditions.
Tips for Avoiding Business Fraud:

  • Purchase merchandise from reputable dealers or establishments.
  • Obtain physical address rather than simply a post office box and a telephone number, and call the seller to see if the telephone number is correct and working.
  • Send an e-mail to the seller to make sure the e-mail address is active, and be wary of those that utilize free e-mail services where a credit card wasn’t required to open the account.
  • Consider not purchasing from sellers who won’t provide you with this type of information.
  • Purchase merchandise directly from the individual/company that holds the trademark, copyright, or patent.
Tips for Avoiding the Nigerian Letter or “419” Fraud:

  • Be skeptical of individuals representing themselves as Nigerian or foreign government officials asking for your help in placing large sums of money in overseas bank accounts.
  • Do not believe the promise of larges sums of money for your cooperation.
  • Guard your account information carefully.

Friday, March 23, 2012

Mario Massillamany Discusses Sugarland Lawsuit In Entertainment Weekely

Indianapolis, Indiana- Mario Massillamany, in Entertainment Weekly, discusses Sugarland's decision making process that tragic night when the stage collapsed at the Indiana State Fair.  During a hearing this morning, Judge Sosin ordered Sugarland to testify next month in depositions regarding their role in the Indiana State Fair Stage collapse.  Sugarland will not be able to use their summer concert schedule as an excuse in an effort to delay the depositions.  Sugarland claims that the tragedy was an "act of God" and also blames the victims that attended the concert for their injuries.

Thursday, March 15, 2012

Securities Attorneys Get Additional Guidance On Pleading What Constitutes A Domestic Transaction In Other Securities

In 2010 the Supreme Court muddied the waters of the Securities Exchange Act of 1934, declaring it did not apply extraterritorially, after all, and rejecting the until then used test of “conduct and effects.” Now, securities attorneys have been given additional guidance about how to make adequate allegations in their complaint to pass the new test created by the Supreme Court to pass muster under Rule 12(b)(6), when making claims under Section 10(b) or Rule 10b-5.  
In Morrison v. National Australia Bank Ltd., 130 S.Ct. 2869 (2010), the Supreme Court held that Section 10(b) and Rule 10b-5 of the Exchange Act only applies to “transactions in securities listed on domestic exchanges and domestic transactions in other securities.” While the Court, in that case, was able to analyze the facts under the first test, regarding securities listed on domestic exchanges, it did not address the second test, and it remained significantly ambiguous what constituted a “domestic transaction in other securities,” after Morrison.

Therefore, it came as a relief to get additional guidance about this second test from the Second Circuit in the recent case of Absolute Activist ValueMaster Fund Ltd. v. Ficeto, decided on March 1, 2012.  In that case the plaintiffs were nine Cayman Island hedge funds who sued the defendant, their investment manager, Absolute Capital Management Holdings Limited, and several of its officers and employees (several of whom were not U.S. citizens nor located in the U.S.), basically alleging a pump and dump scheme resulting in losses of over $195 million. The plaintiffs purchased securities issued by U.S. companies however, and the deals were brokered through a U.S. broker dealer.

The case came before the Second Circuit who considered the issue of whether the allegations in the complaint were sufficient to allege a “domestic transaction in other securities,” to survive scrutiny under Federal Rule of Civil Procedure 12(b)(6). When considering these allegations the court provided very helpful guidance in determining what factors are, and are not, relevant in passing this test to see if Section 10(b) and Rule 10b-5 are applicable to the transactions.

The Second Circuit held that to sufficiently allege the existence of a “domestic transaction in other securities” the plaintiff must allege facts leading to the plausible inference that either irrevocable liability was incurred or title transferred within the United States. The court explained that the parties “incur irrevocable liability” basically when the contract is formed between the parties. The point of irrevocable liability can be used to determine the locus of a securities purchase or sale. Facts that can be alleged which make this plausible inference could include, but are not limited to, facts concerning the formation of the contracts, the placement of purchase orders, the passing of title, or the exchange of money.

The Second Circuit was also clear about what types of allegations would not be sufficient to constitute a domestic transaction in other securities. For example, the conclusory allegation that the transaction took place in the United States is insufficient. Further, the focus should be upon the locus of the purchases and sales of the securities, and not on the place where the alleged deception originated which constituted the securities fraud. Therefore, in making allegations, although these things may be relevant, they will not be conclusory: the identity of the parties, the type of security at issue, or whether each individual defendant engaged in conduct with in the United States.

The additional clarification by the Second Circuit in Ficeto will be of great help to securities attorneys who represent clients who have purchased or sold securities which are not listed on domestic exchanges. In such instances focusing on the locus of where the contract was formed, or title passed, can help determine whether the Exchange Act applies to the transaction, or not.