Another Ponzi Schemer

By Greg Wright, 

MBA, CFE, CFP®, CLU, ChFC

Certified Fraud Examiner

Certified Financial Planner™

Earlier this month, Carmel financial advisor, Jaime Campos Lopez, age 40, was indicted on 66 counts including securities fraud and wire fraud.  According to the U. S. Attorney’s Office, Lopez induced investors into transferring their IRA funds to him which were used to purchase cars, pay his home mortgage and improve his home landscaping.  

Lopez had a securities license until 2009 when he set up an exhibitor booth at the Indiana Dental Convention without permission.  A complaint resulted in his being charged by securities regulators (FINRA) for providing inaccurate and misleading information to investigators.  He was fined and suspended from the securities business. 

A few months later, he started JCL & Company Inc using a UPS office as a mail drop.  On the JCL business webpage, he was self-described as “the very definition of the American success story.” 

According to his JCL marketing materials, “After completing a successful tenure, he left (SmithBarney) and became Chairman and Chief Executive officer of JCL, a conglomerate holding company headquartered in Indianapolis, Indiana, United States, that overseas and manages a number of subsidiary companies.” (SIC) 

At the time of his indictment, Lopez did not have either an insurance or securities license.  According to the Indiana Department of Insurance, Lopez’s insurance license #743789 expired on December 31, 2012.  IDOI records show the same UPS mail drop used for his business address.

Records indicate that Lopez solicited hundreds of thousands of dollars telling investors he had reinvested the money by loaning it to outside businesses, purchased corporate bonds or invested in real estate.  He met many of his investors at church.  New funds were used to pay interest to old investors.  Hello, Mr. Ponzi.  

Veros Partners Update

By Greg Wright, 

MBA, CFE, CFP®, CLU, ChFC

Certified Fraud Examiner

Certified Financial Planner™

The SEC alleges that Veros Partners and multiple related co-defendants defrauded 80 farm-loan investors of $15 million in 2013 and 2014, using those proceeds to repay earlier investors.  

You may recall from my blog post yesterday that Veros Partners President Haab's web page bio indicated that he was a Certified Financial Planner; however, the CFP Board disagreed. Using e-mail addresses contained on this web page, I asked Haab about the apparent absence of certain disclosures on the website (including the ADV Part II).  He has not yet responded. 

Today, Mr. Haab’s Partner, Adam Decker, notified clients and others, in part, as follows, “The SEC complaint focuses on offerings made during 2012 through 2015 to fund farm loans.”  “We apologize that we cannot comment further on the complaint at this time.” 

Earlier today I met with a non-accounting member of the dental community, at her request.  She indicated that certain members of the Veros Partners team held themselves out as being CPAs; however, they were not licensed accountants.  After finding the apparent discrepancy in Mr. Haab’s professional credentials, this did pique my interest.

Also, within the past 24 hours, Veros Partners web page apparently was placed “Under Construction” and the listing of its team members no longer is available.  However, having screen shots that I took earlier of the team member listing, I was able to research and identify one CPA team member that could not be verify as a CPA by using the State of Indiana CPA licensing verification website. 

Further, that individual has apparently modified her LinkedIn page to omit any mention of an employer named Veros Partners.  She does not appear to be a firm partner; therefore, I have omitted her name in this posting. 

As I explained in a meeting with a current Veros Partner employee this afternoon, it will take months to determine the guilt or innocence of the defendants.  This CPA needs legal advice on the matter.  Because, according to the “Indiana Lawyer”, Judge Jane Magnus-Stinson issued an asset freeze order against Veros Partners and the co-defendants.

The follow this link to the SEC Complaint.  

Is this CPA masquerading as a Certified Financial Planner?

Matthew Haab, CFP, CPA

Veros Partners President, Matthew David Haab, along with two others, have been charged by the Securities & Exchange Commission.  Haas’ bio states that he is a Certified Financial Planner; however, the CFP Board disagrees.  Is Veros an isolated example of a CPA crossing the line or lax due diligence or was the whole thing simply a stupid mistake?  Below is a blog post from Advance Indiana:

Two local investment advisers, along with a Carmel attorney, stand accused by the Securities & Exchange Commission of running a $15 million Ponzi scheme. Charged in the scheme are Veros Partners' Matthew Haab and Tobin J. Senefeld, and Jeffrey B. Risinger, a Carmel attorney.

According to a press release issued by the SEC, the three men raised $15 million from about 80 investors for the purpose of making short-term loans to farmers. In actuality, the investment proceeds were used to cover unpaid debts already owed by farmers who had been previously loaned money. At the same time, the three men are accused of paying themselves $800,000 in undisclosed "success" and "interest rate spread" fees.

In addition to Veros Partners, Haab, Senefeld and Risinger, the federal complaint also names as defendants Veros Farm Loan Holding, LLC and FarmGrow Cap, LLC, the issuers of the offerings and PinCap, LLC and Pin Financial, LLC as the registered broker-dealer. According to the press release, Judge Jane Magnus-Stinson issued an asset freeze order against the defendants, as well as a temporary restraining order prohibiting them from soliciting, accepting or depositing any monies from prospective investors.

Veros Partners Website Screenshot

The Veros Partners website screenshot asks “Why Veros Dental?”   It asks if you have a CFP on staff; but, looks like they do not have a Certified Financial Planner either.  President Haab indicates he is that expert.  His bio lists him as having a CFP designation; but, the Certified Financial Planning Board disagrees. 
 

Just who is their investment expert?  Other than Haab’s false CFP assertion, I cannot find evidence of investment expertise on the Veros website.  I sent Haab an email and await an explanation. 

Oh, I almost forgot.  Stockbroker Tobin J. Senefeld is somewhere in the mix and also a defendant in the SEC complaint.  Wow!  Senefeld has 25 Financial Industry Regulatory Authority (FINRA) disclosed events including seven “Judgment/Lien” events, a history of over a dozen traffic violations, and six small claims related suits.  Maybe Veros didn’t want his string of tin cans disclosed to their dental and business owner clients.  Just a thought.  Maybe Haab will clear this up.  I’ll let you know.

It may not be the case here; but, sometimes CPAs over-extend and profess expertise that they simply do not have.  Some advertise that they can help you select and plan your investments; but, most don’t have the creds.  I’ve asked the national AICPA and the CFP Board to take a look at Veros and Haab.  

The Puppet Goes to Jail

Preface

Something about the Phyllis and Marla Stevens embezzlement case did not feel right, but I could not put my finger on the inconsistency.

 

As you may know, I have been researching long-term embezzlers that have been successful in avoiding detection for eight years or longer.  All of the individuals in my study have been convicted in a court of law and have served time in prison.  Since the majority of embezzlers are caught within three years, I’m trying to learn how a few are able to avoid detection for a much longer time.

 

Phyllis Stevens was a home-grown Indianapolis resident that had worked for a local insurance company and its successor Des Moines Iowa organization for over thirty years.  I read Indianapolis news accounts, Advance Indiana blog posts and, as I got deeper into the weeds, Des Moines Register articles by Tom Witosky, and court documents.  Something did not click. 

I communicated with people that have known and worked with this same-sex married couple, Phyllis and Marla Stevens.  I also exchanged emails with a fellow Certified Fraud Examiner and the FBI Special Agent that put the federal case together.  I am not a psychologist; therefore, I reached out to my criminal psychologist friend, Paul Babiak, Ph.D., for help in sorting it all out.  Paul, the co-author of “Snakes In Suits”[i], read the background materials I sent him and referred me to sections in his book.  The following is a summary of Paul’s writing and other materials concerning the subject.

The Puppetmaster

The most attractive targets for puppetmaster con-men are women who are insecure, lonely, self-viewed as flawed, and isolated from friends and family. 

The puppetmaster has a talent for “reading people” and making themselves non-threatening and reassuring.   Many are financial parasites leeching their victims.  By quickly identifying the target’s weaknesses and “buttons,” they can appear to like and understand them.  Their message reinforces a fragile person’s self-perception, in effect, saying, “I like you just as you are.” 

By convincing the victim that they understand, like and appreciate them, is a powerful validation and makes the victim feel very special.  This often disarms their defenses. 

The victims – the puppets – enjoy the attention and, even if they suspect that they are being manipulated, often they have been disarmed and may be afraid and embarrassed to stop the process.  Some of the victims take on attributes of abused spouses and blame themselves for their emotional abuse.  The victims often take full responsibility for the actions that were initiated by the puppetmaster. 

In describing his role in the theft, one puppetmaster-offender had this to say:

“At a church organization, a friend introduced me to this plain looking, shy plump woman.  We started to talk and to know each other.  I started to know her and, because, the more she told me about herself, the more leverage I had.  I listened.  The more I knew about this woman, the more I know what buttons to push.  So, I started pushing those buttons.  She had a lot of unresolved issues from her childhood, her sexuality, guilt, so I started to get her to feel her anger.  She had suppressed anger and felt especially very angry toward her employer. 

I became her lover.  Later I said about her employer, “They have money.  Lots of money.  Why don’t you take some? I’ll help you spend it because I’m your friend.”  The situation escalated, and I encouraged the escalation.  I don’t know if in the back of my mind I truly believed what the capabilities were, but I did not care.  So it started to become a plan.  I just keep the feeling the fire, the more fuel I added to the fire the bigger payoff for me and plus that sense of control, power.  I became the puppetmaster pulling the strings.” 

The Puppet Goes to Jail

Indianapolis resident, Phyllis Stevens, received a six-year sentence for embezzling $6 million from her employer and today remains, wheelchair-bound, in a Texas federal prison.  Her same-sex spouse, Marla Stevens, released last year, is now living in her old apartment complex in Southside Indy’s Perry Township.

Phyllis took most of the blame for the crime and testified that she lied to Marla.  However, according to some accounts, Marla Randolph Stevens manipulated Phyllis Rowe Stevens into embezzling $6 million from Phyllis’ employer. 

This decade-long criminal series started at Indianapolis Life and continued after it was sold to Aviva.  Phyllis transferred to Des Moines continuing the embezzlement.  Marla stayed behind in Indianapolis. 

Was Marla the puppetmaster as some believe?

 

Part II will be published next week and contain more details about Marla and Phyllis Stevens' crime. Your comments will be welcomed.  

[i] Paul Babiak, Ph.D. and Robert D. Hare, Ph.D., Snakes in Suits: when psychopaths go to work, (New York: HarperCollins, 2006) pgs 75, 190,192, 275-276.

Long-time insurance agent steals $1.3 million from elderly clients.

A financial advisor with more than 30 years in the business and impressive professional credentials used a Ponzi scheme to defraud elderly clients.  Kevin James’ record of customer allegations of fraud went back ten years and were available in public records only a few clicks away. 

Charles Ponzi

Indiana Secretary of State, Connie Lawson, is quoted saying, “If only one investor would have called my office or checked our online database, his scheme would have crumbled.” 

Unfortunately, few investors and even fewer members of the elderly community know how to navigate the Secretary of State, Dept. of Insurance or the regulator’s websites.  They need basic simple instructions on how to look up a financial advisor’s license and past deeds.

Some fraudsters offer investment “schemes which have no more basis than so many feet of blue sky.”  This language was cited in a Supreme Court case over a hundred years ago and thus the term “blue sky” regulations came into use.  Investment scams haven’t changed much since then. 

     

Kevin James lived the high life a block away from Geist; kids went to private school, he belonged to a country club and had Colts season tickets.  Last fall he went away to federal prison for ten years. 

A Chartered Life Underwriter and Chartered Financial Consultant, Mr. Kevin James operated an investment company called Financial Security Investments and promised high returns.  He deposited clients checks to his personal account and used the funds to finance his lifestyle. 

His investment company did not exist, and he had never registered his Financial Security Program with regulators.  However, he was well known by regulators.

According to the Financial Industry Regulatory Authority (FINRA) records, in 1996 James was fired by an insurance company.  Also, in 1996, a customer alleged misrepresentation and was given a refund.  A year later, in 1997, he was fined by the National Association of Securities Dealers.  Next, in 2007, his employer reported an alleged $500,000 customer complaint to regulators.  This history was available to investors and the public only a few clicks away.  If you know where to look. 

12148 Bay Ridge Court

Strangers commit half of financial fraud against the elderly, followed by fraudsters introduced by friends, fraudsters met at church, and relatives that defraud relatives.  Check out financial advisors -- especially relatives -- that want you to invest in their latest scheme.  You may be buying “blue sky.

Kevin James, age 58, was sentenced to ten years in federal prison for securities fraud,  mail fraud, and money laundering.  His Geist home 12148 Bay Ridge Court is in forclosure.