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

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#

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.

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.

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.

An Interesting Twist Where Broker-Dealer Seeks To Enjoin Customer From Arbitration In FINRA And Is Denied By The Second Circuit

An interesting case that securities arbitration attorneys should find ironic. In the case of UBS Financial Services, Inc. v. West Virginia University Hospitals, Inc., decided on September 22, 2011, the Second Circuit upheld the decision of the district court to dismiss a motion to enjoin arbitration in FINRA filed by a FINRA member, UBS, against its customer.

Although the more typical case involves a customer filing a securities fraud action in court, and having the defendant move to enforce an arbitration agreement, and remove the case to FINRA, in this recent case the tables were turned. Instead, it was the customer, West Virginia University Hospitals (WVUH) who wanted to bring an action against UBS in FINRA arbitration, and UBS fought tooth and nail to try to get it thrown out of arbitration and into court.

The case deals with auction rate securities (ARS), which UBS persuaded WVUH to use as the vehicle for a large financing project, where UBS would serve as both the underwriter and the broker-dealer in the auction services. Unknown to WVUH, UBS, as the broker-dealer, would place additional bids on all its auctions to make sure they did not fail, which concealed the true risks of liquidity of this made-up market which collapsed in February 2008 during the financial crisis. This collapse caused WVUH to have to pay much higher interests rates on the debt until it could refinance several months later.

Therefore, WVUH filed an arbitration Statement of Claim against UBS, alleging that UBS had violated the Securities Exchange Act of 1934 and the Uniform Securities Act by advising WVUH to issue ARS while withholding critical information about the ARS market and UBS’s role. Further, WVUH alleged that UBS fraudulently induced it to purchase auction services, while UBS withheld critical information about the ARS market and UBS’s role. Interestingly, in all the agreements between the parties there were no documents which contained an arbitration clause, and none referred to any provisions of the FINRA code.

UBS is a member of FINRA, and as such when it joined it agreed to comply with FINRA’s rules. One of those is Rule 12200 of the FINRA Code, which obligates UBS to arbitrate a dispute with a “customer” at the customer’s demand, if the dispute arises “in connection with” the business activities of the member. This is the rule WVUH used to initiate arbitration. UBS argued this rule did not apply because WVUH was not a “customer,” but the Second Circuit determined, as a matter of law, that WVUH was a customer of UBS when it served as a broker-dealer for the ARS auctions. The court further determined that a “customer” is a non-broker or non-dealer who purchases, or undertakes to purchase, a good or service from a FINRA member.

This case is interesting for all securities arbitration attorneys to note, because it turns the tables on the normal considerations in FINRA arbitration cases. Normally FINRA arbitration is seen as a shield for the broker-dealers, who invoke their arbitration clauses to stay away from the court. However, as this case demonstrates in certain instances customers who wish to can use this FINRA rule as a sword to compel a FINRA member into arbitration even without an arbitration agreement in place, if they so desire.

Self-Directed IRA Fraud: Are You A Victim?

What Are Self-Directed IRAs?

Self-directed IRAs are a type of financial instrument which allows a person to invest in a larger range of assets than a traditional IRA. Many of us are familiar with IRAs that invest in stocks, bonds, mutual funds, and certificates of deposit, but self-directed IRAs expand from these more traditional investing avenues, and also allow someone to invest in promissory notes, real estate, precious metals, private placement securities, tax lien certificates, and other investments which may not be registered.

This type of IRA is becoming increasingly popular in the United States, with about $94 billion of retirement funds invested in them. They are completely legal, when used correctly. However, some of the inherent characteristics of this financial instrument have not only attracted legitimate investments, but in addition scammers and fraudsters who use the patina of the self-directed IRAs legality to defraud investors of their life savings.

What Are The Inherent Characteristics Of Self-Directed IRAs That Make Them Susceptible To Fraud?

As with all IRAs, a self-directed IRA must be held by a trustee or custodian. However, with the more traditional IRAs the custodians are typically banks and broker-dealers who only allow investment in firm approved stocks, bonds, mutual funds and CDs. However, with a self-directed IRA the trustee or custodian has no responsibility to investigate the securities offered for investment, or the background of the promoter. Further, they also do not need to keep accurate records or perform audits. With these laxer requirements it is easy to see why those wishing to engage in fraud would be interested in using this financial instrument to perpetrate it.

The fact that this type of IRA allows investment in a broader range of assets can increase the likelihood of fraudulent behavior. For example, unregistered securities are permitted in this type of IRA. There is typically less investigation into this type of security, with less information easily available, and further there is no guarantee that any information provided has been audited. Therefore, in a situation in which more due diligence is typically required there is less opportunity to review accurate information to perform that due diligence.

In addition, the broader range of assets allowed for self-directed IRAs can create unique risks for investors that should be considered, such as lack of liquidity and difficulty in valuing assets. The result of the characteristics of these assets means that the self-directed IRA custodians will often list the value of the assets as the original purchase price, plus any gains as determined arbitrarily by the promoter. These values that are told to investors may not reflect the true value of the investment if sold on the open market. Further, because the custodians don’t have to evaluate the quality or legitimacy of the investments, and have no responsibility for investment performance, these self-promoting statements may go unchecked and unquestioned.

Finally, the fact that self-directed IRAs are a tax-deferred account can impact psychologically how much oversight an investor has over this type of investment instrument. The fact that there is a financial penalty for early withdrawal means people tend to invest in these types of accounts for the long term, when more prudent investors in these types of investments may more actively manage such accounts. This same mind set may also allow the person committing the Ponzi type scheme or other fraud to conduct their fraud longer before their misdeeds are detected.

Scott Starr, a partner in this firm, has stated, “Some of these investment advisors and stockbrokers are clearly committing malpractice and breaching their fiduciary duties” when directing individuals to invest in these self-directed IRAs. Further, he states that “It is not uncommon for these individuals to place their clients in investments that are either too high risk, carry a time horizon that is too far in the future, or fail to properly diversify these portfolios.”

Examples Of Self-Directed IRA Fraud Close To Home

Although fraudulent actions surrounding self-directed IRAs can, unfortunately, happen anywhere in the country the state of Indiana, and surrounding states, have had several instances of this type of fraud coming to light.

1.     Randell Morrison - Indiana

One of the most recent cases of self-directed IRA fraud reported in Indiana is the case of Randell Morrison, which has been reported extensively in the  Fort Wayne, Indiana Journal Gazette. http://www.journalgazette.net/article/20111120/LOCAL/311209934 On November 10, 2011, Mr. Morrison was sentenced to six years in prison, followed by a year of home detention and then one year of probation for bilking 15 investors in Indiana, mainly in the Allen County area, out of $1.4 million.

Mr. Morrison was a businessman in the community, and used his personal associations with fraud victims, including being a friend of the family, and attending country clubs, churches and social clubs with them, to gain their trust over several years. He then convinced these investors to roll their more traditional IRAs and life insurance proceeds into a self-directed IRA custodial company, called Equity Trust, with which he was associated. His victims thought they were investing their money in conservative and traditional investments, but instead once he gained control of the money he used it for his own personal use and for his businesses.

The Indiana Secretary of State, Charlie White, said, “Randell Morrison preyed on those who considered him a friend. He didn’t just gamble with their life savings, he squandered their life savings.” Many of the victims of this scheme were close to retirement age, and have now lost their entire retirement account and life savings. They have suffered not only financial losses, but also emotional and even physical distress because of the fraud perpetuated against them.

2.     Jerry Smith and Jason Snelling - Indiana

Another case in Indiana that is currently pending involves Jerry Smith and Jason Snelling, who are accused of conducting a long-running Ponzi scheme, defrauding investors in three states, Indiana, Ohio and Kentucky, of over $4.5 million. Smith and Snelling were allegedly selling unregistered securities, and neither was licensed to sell them.  

In this case the accusation is that investors were convinced and encouraged to roll over their traditional IRA accounts into self-directed IRAs at a trust company. Then, Smith and Snelling allegedly took the funds from the accounts and used them for their own personal use. The investors had no idea their money was no longer available, since they still received regular statements from the trust company, and even were billed fees on the accounts.

Smith and Snelling are charged with over 50 counts of violations of the Indiana Uniform Securities Act, and charges are pending in both Franklin County and Dearborn County, Indiana.

Things To Consider To Determine If You May Be A Victim Of A Fraudulent Self-Directed IRA

The U.S. Securities and Exchange Commission’s Office of Investor Education and Advocacy (OIEA) and the North American Securities Administration Association (NASAA) have jointly issued an Investor Alert about the potential risks associated with investing in self-directed IRAs. You can find this short PDF here. http://www.sec.gov/investor/alerts/sdira.pdf In addition, here is information you should consider if you’re concerned you may be a victim of self-directed IRA fraud.

• Verify the information in the self-directed IRA. Many of the investments that can be purchased through one of these financial instruments can be hard to value, since they are illiquid. Therefore, the statements provided will often state their value as the price you paid for it, or what the promoter is valuing it at. However, that does not necessarily reflect what the investment could actually be sold for on the open market, which may be a much lower amount.

• Was your choice to get a self-directed IRA the result of an unsolicited investment opportunity from a total stranger, or even a friend? As stated previously, self-directed IRAs are legal and there are some which may produce high rates of return for investors. However, if someone, unsolicited, asked you to invest in such a financial instrument red flags should be raised to determine if they are a legitimate individual, or instead a fraudster.

• Were you promised a guaranteed gain or rate of return, or a low-risk, high reward investments? Similarly, when someone promises you something too good to be true, it usually is. Almost nothing in life is guaranteed, and if there were legitimate low risk, high reward investments out there lots more people would be rich than are today. Too good to be true promises such as these should also raise red flags in your mind, to investigate further about whether you are the victim of self-directed IRA fraud.

• Is the self-directed IRA promoter registered in the state they are doing business, and in addition are the investments they are selling licensed? Many states, including Indiana, have laws and regulations in place which require those selling securities to be registered with the state. Further, only certain types of investments are deemed registered securities. While unregistered securities are permitted to be included in self-directed IRAs they are much riskier, and their inclusion may still violate state law, if not federal law. It is best to make sure what you are purchasing through your self-directed IRA is licensed, and the person you’re purchasing it from is registered to sell you these types of products.

• Have you contacted another professional yet for a second opinion, such as an investment advisor or attorney? Many of the investments that can be purchased through a self-directed IRA are not ones that can be purchased through a traditional IRA, generally for the reason that they are even more inherently risky, illiquid, or complex. Therefore, before investing in such financial instruments it is a good idea to get a second opinion from an independent professional, such as an investment advisor or attorney, to help you determine whether this is a good investment for you.

If You Think You May Be A Victim Of Self-Directed IRA Fraud Call A Securities Fraud Attorney

If you think you may be a victim of fraud using this financial instrument you should act quickly to try to minimize further losses, and potentially try to reclaim money you’ve lost already. To do this, it is best to contact a knowledgeable securities fraud attorney in your area to see if you have a case, and determine the best course of action for you.

If you have lost money in a fraudulent investment scheme involving a self-directed IRA or a third-party custodian or trustee, or have information about one of these scams, you should contact Starr Austen & Miller LLC to learn more about the self-directed IRAs and report your experiences. Our attorneys, Mario Massillamany and Mark Fryman are available for direct live chat every Wednesday at 5 pm.

Indiana Law Firm Investigating Securities Fraud Stemming From Self-Directed IRA Schemes

Fishers, IN, January 3, 2012 - Mario Massillamany of the Indiana law firm of Starr, Austen & Miller, LLP, announces an investigation into securities fraud scams involving self-directed IRAs.  A self-directed IRA is an IRA held by a trustee or custodian that permits an investment in a broader set of assets than is permitted by most IRA custodians. 

Most IRA custodians are banks and broker-dealers that limit the holdings in IRA accounts to firm-approved stocks, bonds, mutual funds and CDs.  Custodians and trustees for self-directed IRAs, however, may allow investors to invest retirement funds in other types of assets such as real estate, promissory notes, tax lien certificates, and private placement securities.  $94 billion of IRA retirement funds are held in self-directed IRAs making them a favorable scam for fraud promoters

Fraud promoters who want to engage in Ponzi schemes or other fraudulent conduct may exploit self-directed IRAs because they allow investors to hold unregistered securities.  Additionally, the custodians or trustees of these accounts have no responsibility to investigate the securities or the background of the promoter.  Furthermore, self-directing IRAs do not typically require the trustee or custodian to keep accurate records or perform audits.

"Some of these investment advisors and stockbrokers are clearly committing malpractice and breaching their fiduciary duties in the way they are advising their clients to invest in their self directed retirement programs such as IRA’s and 401k’s," said attorney Scott Starr.  “It is not uncommon for these individuals to place their clients in investments that are either too high risk, carry a time horizon that is too far in the future, or fail to properly diversify these portfolios."

The self-directed IRA custodial process gives the aura of protection for the investor but it is elusive. A few ways to avoid fraud with self-directed IRAs is to verify information in self-directed IRA account statements, avoid unsolicited investment offers, ask questions from the promoter, be mindful of “guaranteed” returns, and seek advice from a trained professional. 

About the law firm:

The law firm of Starr Austen & Miller LLC has over 90 years of experience in securities and class action litigation. The firm has earned a national reputation among litigators by handling cases ranging from personal injury caused by exposure to toxic chemicals to mass and class actions against national brokerage firms for securities fraud.

Legal Resources for Impacted Investors

If you have lost money in a fraudulent investment or scheme involving a self-directed IRA or a third-party custodian or trustee, or have information about one of these scams, you should contact www.starrausten.com to learn more about the self-directed IRAs and report your experiences.

Source/Contact:

Mario Massillamany

574-722-6676

mario@starrausten.com