Veros Partners Reach Agreement With SEC

By Greg Wright

MBA, CFE, CFP®, CLU, ChFC

Certified Fraud Examiner

Certified Financial Planner™

Earlier this week, the SEC reached an agreement with Veros Partners' executives Matthew D. Haab and Jeffery B. Risinger.  Defendant Tobin Senefeld is scheduled for trial later this year. 

On April 22, 2015, the Securities and Exchange Commission filed charges[i] against Veros Partners, an Indianapolis investment adviser, its president, Matthew Haab, two associates, attorney Jeffery Risinger and former stock-broker Tobin J. Senefeld, and several affiliated companies for engaging in fraudulent farm loan offerings, in which they made Ponzi scheme payments to investors in other offerings and paid themselves hundreds of thousands of dollars in undisclosed fees.

According to the SEC's complaint, they fraudulently raised at least $15 million from at least 80 investors, most of whom were Veros Advisory clients. According to industry sources, many of these clients were Indiana dentists. 

The investors were informed – according to court documents -- that their funds would be used to make short-term operating loans to farmers, but instead, significant portions of the loans were to cover the farmers' unpaid debt on loans from prior offerings.  According to the SEC, “Haab, Risinger and Senefeld used money from the two offerings to pay millions of dollars to investors in prior farm loan offerings and to pay themselves over $800,000 in undisclosed "success" and "interest rate spread" fees.”  The SEC also charged Tobin Senefeld’s registered broker-dealer (Pincap LLC) Pin Financial LLC.

On August 16th, according to SEC filings, Matthew Haas agreed and signed a Final Judgment agreeing to pay $183,640.[ii]  Haab also agreed in a separate SEC proceeding, to be instituted shortly, “barring him from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent or nationally-recognized statistical rating organization.”

Similarily, Jeffery Risinger agreed to pay $100,000.  Likewise, Risinger agreed to similar stipulations that he be barred from any future association with any broker, dealer, investment advisor, etc.

Tobin Senfeld currently does not hold a securities license (FINRA CRD #2120820).  Further, his broker-dealer, PIN Financial LLC (CRD #132876) was expelled from the securities industry in June 2016. 

I understand that the court-appointed receiver, William Wendling, has recovered 20% of investors’ funds.

 Veros Partners first came to my attention a year ago when I received a tip that Mr. Haab was not a Certified Financial Planner and at least one of Veros Partners' CPAs were not licensed CPAs.  The facts at the time were that -- indeed -- Mr. Haab was not a Certified Financial Planner.  

This, in part, led me to construct a short instruction course that I deliver to Senior groups: "Is your financial advisor a crook?"  I teach Seniors how to use public sources and verify the professional credentials and complaints that may have been filed against one or more of their financial advisors.  

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[i] http://www.cgglawfirm.com/Receiverships/Court-Filings/01_2015-04-22_Complaint.pdf

[ii] http://www.cgglawfirm.com/Receiverships/Court-Filings/253_2016-08-15_Corrected_Motion_Final_Judgment_v_Haab_and_VerosPartners.pdf

Universities Sued by Employees Over High Pension Plan Fees

By Greg Wright

MBA, CFE, CFP®, CLU, ChFC

Certified Fraud Examiner

Certified Financial Planner™

This past week, MIT, Yale, and NYU were accused of charging employees excessive fees on their retirement savings.   The dirty little pension plan secret is that, in many pension plans, the employee pays almost all the plan’s expenses.  Employers experience little or no cost except for the contribution match that may cost them little out-of-pocket.  Especially when the match is paid in company stock.

The universities — the Massachusetts Institute of Technology, Yale University, and New York University  — each have retirement plans holding more than $3 billion in assets -- are each being sued by a number of their employees in cases seeking class-action status. 

Over the last decade, lawyers have filed numerous lawsuits against organizations including Anthem, Cigna, Caterpillar, British Petroleum, Boeing, Wal-mart, and New York Life on behalf of employees enrolled in 401(k) retirement plans.   Most have been settled in multi-million dollar awards. 

With the latest suits filed in federal courts this past Tuesday, the focus has turned from the corporate retirement savings market to non-profit organization 403(b) plans. These accounts are similar to 401(k) plans but are offered by public schools and nonprofit institutions like universities and hospitals.

The latest complaints allege that the universities failed to monitor excessive fees paid to administer the plans and did not replace more expensive, poor-performing investments with cheap ones.  Lawyers argue that participants could have collectively increased their retirement holdings by tens of millions of dollars.

The stated aim of the suits is to reduce conflicts of interest and the fees consumers pay.  In many cases, they argue, employers have not acted in the best interest of employees.  Pension administrators and investment managers have been chosen using arbitrary criteria and because of personal relationships with company executives and Board members.

Even modest reductions in costs can have a significant effect on retirees’ savings. According to the Labor Department, paying one percentage point more in fees over a 35-year career — say 1.5 percent instead of 0.5 percent — could leave a worker with 28 percent less at retirement. An account with $25,000 — and no further contributions for those 35 years — would rise to only $163,000 instead of $227,000, at an annual rate of 7 percent.

The complaint against N.Y.U. Charges that participants were offered too many investment choices  - there were more than 100 options for some employees, and many of them were too expensive.

The suit also argues that even the cheapest funds offered could have been provided for less, given the enormous size and bargaining power with $4.2 billion in assets for more than 24,000 participants.  The complaint also alleges that the university did not use its negotiating powers and overpaid for administrative services for many years. 

The issues concerning Yale’s 403(b) retirement plan — which held nearly $3.6 billion in assets follow a similar pattern.  According to the New York Times, “Yale eventually consolidated to one provider, TIAA, in April 2015, and swapped in some lower-cost investments, but the suit claims that the changes did not go far enough to fully protect the interests of its employees.”

The suit alleges that MIT, because of its longstanding relationship with Fidelity, did not conduct a thorough search for a plan provider, which might have provided better service for less. The complaint said that Fidelity had donated “hundreds of thousands of dollars” to M.I.T., while Fidelity’s chief executive, has served as a member of M.I.T.’s board of trustees, giving influence over the institution’s decision-making.

As I pointed out earlier this year, the courts may be interested; but, the regulators appear to be less interested – especially in the smaller plans.  Smaller employers have even higher fees.  Your boss’s relative or golfing buddy may receive a major part of his income from your pension plan. 

Here is a list of fees 401K and 403B participants may be paying:

·                Investment advisor fees for managing the fund’s portfolios

·                Marketing fees

·                Shareholder service fees

·                Custodial expenses

·                Legal expenses

·                Accounting expenses ·                Sub-accounting fees

·                Transfer agent expenses

·                Brokerage Commissions

·                Sales loads

·                Redemption fee

·                Exchange fee

·                Account fee

·                Purchase fee

·                Maintenance fee

·                Plan set-up

·                Portfolio management fees

·                Educational materials and services expenses

·                Recordkeeping services

·                Employee enrollment services

·                Customer service

·                Legal advice to employer

·                Compliance testing expenses & audits

·                Fees for investment seminars, investment advice, loan fee

Ask for a copy of your company’s retirement plan document.  Check out your employer’s obligations and your rights. 

Assoc. of Certified Fraud Examiners Elects New Officers and Board

Newly elected Assoc. of Certified Fraud Examiners Indy Chapter Officers and Board members at last night’s meeting (from left): David Grannan, Erik Buchenberger, Jack Armstrong, Jo Griffiths, Greg Wright, Markita West, David Fink, Bonnie Brunton. 

Here is a complete list of the Officers and Directors:

President:           Greg Wright

Vice President:   Jack Armstrong
Secretary:            Teri Dervenis
Treasurer:           David Fink
At Large:              Dan Boylan
At Large:              Bonnie Brunton
At Large:              Erik Buchenberger
Membership:      David Grannan
Training:               Jo Griffiths
At Large:              Troy Janes
At Large:              Markita West

Greg Wright & Greg Garrison

Also (shown at left) is the speaker, Greg Garrison, and ACFE Chapter President, yours truly, Greg Wright. Garrison taught a two-hour ethics course and, at dinner, shared his predictions for the upcoming elections.

Amish Madoff

By Greg Wright

MBA, CFE, CFP®, CLU, ChFC

Certified Fraud Examiner

Certified Financial Planner™

Amish man on cell phone

Every day between 50 and 100 Amish readers visits a blog article I publishes last December.  “Amish on Amish Fraud” has had thousands of visits and 150 have added written comments.  The latest arrived today.  Most are written in the very early morning while most of the English (non-Amish) community is still in bed. 

Last November, Goshen Indiana resident, Earl Miller, was accused in a Federal lawsuit of securities fraud and cheating 70 mostly Amish Indiana investors out of $3.9 million.  He is alleged to have sold them promissory notes with a fixed-rate annual return of between 8 to 12 percent. 

Many of Miller’s investors belonged to a Northern Indiana Amish community where Miller and his wife were former members. He advertised his investment services in Amish newspapers, including The People’s Exchange, and at community meetings with Amish families, according to the Federal complaint.

The Federal lawsuit accuses Miller, of committing a fraudulent scheme through two investment vehicles —  5 Star Commercial LLC and 5 Star Capital LLC. In the suit, the government said, “Miller repeatedly lied to prospective investors” about how their money was being used.”

Miller asserted his Fifth Amendment right against self-incrimination and refused to answer the SEC’s questions about his companies, according to court papers.  Also, according to comments made on my blog, Miller has filed for bankruptcy protection and moved to Colorado.  

How do they send email?  Amish are known to reject telephones in the home.  Yet, in recent years, the image of an Amish farmer speaking on a cellphone is increasingly common.  Amish churches regulate the use of technology through a set of guidelines known as the Ordnung.  My Amish friends guess that about 50% or more Amish have smartphones which also access the internet. Only a few pockets of their church districts do not allow this form of technology. 

Technology is not the only thing that apparently recently changed in Amish land. 

Monroe Beachy

In 2012, an Ohio Amish man, Monroe Beachy, was sentenced to prison for fraud.  Investors in Beachy’s investment fund lost $17 million, and the U.S. Attorney described it as “fraud on a massive scale.”

Beachy, age 78 at the time, pled guilty to defrauding hundreds of clients and requested to serve his sentence at home, but this was rejected, and the judge sent him to prison. Included among his victims were widows and retirees, children, a Mennonite church, a school fund, and the Amish Helping Fund. Beachy was the Helping Fund’s treasurer.

Beachy assured the investors their money was safe and sent them hand-written monthly statements that showed stable accounts and high interest earned, according to prosecutors. However, his investments actually were crashing in value, and by 1998 he had lost millions in risky stocks, mutual funds, and junk bonds.

The judge questioned Beachy during the hour-long hearing, asking why he had not simply informed his clients that he lost their investments, and avoided committing the crime of fraud.
Beachy told the judge he has confessed his sins to God and his church, and he sent letters to every investor seeking their forgiveness. Only two wrote back asking the judge to sentence Beachy to prison. The others said it was more important for them to forgive Beachy than to recover their lost money.

The Amish community wished to handle the matter themselves.They probably would have, had Beachy not first filed a bankruptcy claim.   An Amish committee made a special request to the court that they are allowed to deal with the matter themselves, but it was rejected.

Sometimes the Amish prefer handling transgressions internally.  However, the bankruptcy filing caused the matter to go ahead in a non-Amish court of law thus precluded an Amish sorting-out.  At the time, even though many people lost much money, many in that Ohio community considered it to be something that Amish could forgive.  

John Sensenig

Another Amish fraud case in 2010 involved a man named John Sensenig, a horse-and-buggy Mennonite living in Lancaster County, Pennsylvania.  Sensenig’s $90 million investment scheme involved investors drawn largely from the Amish & Mennonite community – this was nearly five times the size of Beachy’s scheme.

The SEC resolved the Sensenig case and settled for $131,500, which was, according to published reports, “about all he has left”, and he agreed to take no part in future financial offerings.

Interestingly, Sensenig was never the subject of a criminal case, and appeared to benefit from long-standing traits unique to that tight-knit, turn-the-other-cheek world of the Amish and Old Order Mennonites: Trust your brethren. Resist outside influences. Be forgiving.”

Earl Miller

Beachy’s big mistake was filing for bankruptcy or he probably would not have been sent to jail.  He will be released in a few months from Morgantown Minimum Security Prison in West Virginia. John Sensenig remains in the Mennonite community, working as a welder and attending church regularly. Earl Miller is hunkered down in Colorado not answering the phone.   

Celebration of Gary Welsh's Life

The following was sent via e-mail today by Leon Dixon.  I have been asked by the Indianapolis Tea Party to post it on my blog.  I've made a few minor changes.  Thanks Leon.  A similar call was issued by Paul Ogden on his blog. 

     "This Thursday evening, a gathering will be held to honor his memory and to let his family know how important he has been to Indianapolis and the cause of reducing political corruptions both large scale and small.  The gathering will be at K of C North, beginning at 6:30 p.m. and concluding officially no later than 8 pm.  There will be, as with our Tea Party North meetings, a special menu beginning around 5:30 p.m.  Gary had been a speaker several times to the TPN and often enough attended meetings when the topics were of interest to him.  

     I'm told that a number of Gary's family will show up as we had told them that the timing of their services in Terre Haute were inconvenient for a number of Indianapolis area people who also have day jobs.  Those of you who follow blogs in Indiana pretty much know that Gary's Advance Indiana had a good reputation

      Still, respect is due Gary for standing against and for exposing much that our timid mincing media can't touch for lack of ability, gonads, and the freedom to pursue (e.g. controlled media is controlled for reasons).  I know that Gary sourced some of his ideas with television stations who have attempted to pick up some of the slack.  Other print media actually stole Gary's work and used it without attribution (in my opinion).  Still others having attempted to have local media look into serious problems gave up on them and pushed Gary to break the news to people who cared about such.

       A really bad blow for those kinds of people is that Gary had a lock trap filing system mind.  He seems to have never forgot anything and was able thus to make connections of dots that would not make sense to anyone without his institutional memory.  This could produce long conversations but they were not boring because to the rest of us it was new information.  So, come on by, say a word or two, celebrate our loss."

Refugees With Infectious Tuberculosis Sent to Indiana by Federal Government

In 2015, almost 400 migrants with signs of Tuberculosis settled in Indiana, according to state records.

The state’s TB rate had declined for over 50 years up to 2010, but is now increasing as more migrants are forced by the Federal Government to settle in Indiana. 

According to the "State of Indiana Refugee Health Program Annual Report" dated last December 2015.  Here is the report link.

Why hasn't the press made the public aware of this problem? Is this another example of political correctness?

UPDATE:  According to Arizona officials, as reported by Breitbart, eighteen percent of all refugees resettled in Arizona arrive with a latent TB infection.  

Gary Welsh Dead

By Greg Wright

MBA, CFE, CFP®, CLU, ChFC

Certified Fraud Examiner

Certified Financial Planner™

Gary Welsh, died earlier today.  According to published reports, he died by his own hand in a stairway in the building where he lived. Like many lawyers today, he had complained about poor legal business.

He wrote the blog Advance Indiana and was unafraid of unmasking corruption.  Many of his friends had suggested that he be careful.  

Gary Welsh, on the right, is pictured while he addresses the Commissioners during a 2012 Marion County election commission meeting. He represented me in a matter I had put before the Commission.  I am pictured on the left of this photograph.    

I had asked the Election Board if then Sen. Richard Lugar and his wife, Charlene, had voted illegally in Marion County because they have not lived at the home address on their registration for more than three decades.  Gary won the case.

(Photo: Kelly Wilkinson, Indianapolis Star)