This article is published with permission from the authors, Jason D. Rogers and Brad R. Jacobsen of the Vantus law Group.
Many people would believe that investment advisers are only those that give opinions on which stocks, bonds or mutual funds to buy. However, under applicable securities laws “investment adviser” is much more broadly defined than commonly thought, potentially including those who simply give general financial counseling or planning or those who recommend the purchase of a particular asset.
The question of whether or not a person is an investment adviser frequently arises in a real estate, insurance or other sales context. Such salespeople would not generally think they are subject to the securities laws, but, depending on their activities, they may be. Continue reading
This is a repost of a good article that appeared in this month’s edition of Utah Business. It looks into why Utah has so much securities fraud and echos many of the same conclusions discussed elsewhere in this blog.
State of Fraud
Why is Utah Rife with Fraudulent Investment Schemes?
by Gaylen Webb
It’s been about four years since Val Southwick, the Bernie Madoff of Utah con artists, received his ticket to the state penitentiary for the biggest fraud scheme in Utah history. Today, Southwick sits quietly in a cell in Gunnison, serving out his nine consecutive sentences. Although he pled guilty and expressed remorse at his sentencing, he routinely declines media interviews and is mum about his fraud conviction and the tactics that supported his grand deception. Continue reading
UPDATE: On November 3rd Marc Jenson was sentenced to back-to-back, zero-to-five-year prison terms for failing to pay restitution to investors pursuant to the restitution order in his first fraud conviction involving a bicycle company. Judge Reese had given him three years to pay $4.1 million in restitution, but according to prosecutors Jenson moved to California and used up all of the money to fund his lavish lifestyle. According to prosecutors from the attorney General’s Office, Jenson “went through $9 million, none directed to the victims in this case.”
According to the Salt Lake Tribune, Judge Reese said he based his sentencing decision on “Jenson’s failure to pay the men back on his conviction years earlier for failure to pay federal income tax and a ‘pattern of you raising money, making promises and not repaying [people].’” This City Weekly Article contains a lot of interesting detail about the hearing, and in particular how Mr. Jenson spent the $9 million he raised over the past few years, including “a sports car worth more than $150,000, an extended stay at a Laguna Beach residence costing $360,000 up front for the rental agreement, followed by a nine-month stay at the Pelican Hills Resort in California costing over $500,000.” he also spent some of his investor’s money on something (or someone) called “Russian Wow Girls.”
The case discussed below, involving the Mount Holly Club, is a separate case and has not been resolved yet. That case could well result in more prison time for Mr. Jenson. Continue reading
The North American Securities Administrators Association, Inc. (“NASAA”) has just issued its annual top ten list for this year. This list is the primary “financial products and practices that threaten to trap unwary investors” as told to NASAA by their members, which include the Utah Division of Securities. Continue reading