CHICAGO, June 9, 2014 (GLOBE NEWSWIRE) -- Stoltmann Law Offices continues to investigate Investors Capital Corp and Janney Montgomery Scott for its supervision of recently terminated and arrested financial adviser, Patricia Miller. According to Miller's BrokerCheck report, on May 19, 2014, Investors Capital received a complaint alleging that an investor provided Miller with $80,000 and the funds were misappropriated. Two days later Investors Capital discharged Miller alleging that the broker has been accused of misappropriating funds, borrowing money from customers, fraudulent investment activity and creating false documents.
According to Chicago securities fraud attorney Andrew Stoltmann: "Patricia Miller entered the securities industry in 1992 with Advest, Inc. Since 2010, she has served as a registered broker at Investors Capital Corporation and Janney Montgomery Scott. On June 6, 2014 she was arrested on charges related to running a massive Ponzi scheme by the U.S. Attorney's office in Massachusetts. As part of her scheme, Miller obtained money from clients for purported investments that she never made on their behalf. Specifically, Miller promised high returns if clients put their money into 'investment clubs' called, among other things, KS Investments, KS Investment Partnership, K Squared Development, K Squared Investments, Buck Harbor Investments, Buck Harbor Investment Club, and Buck Harbor Investment Partnership. Miller represented, among other things, that funds put into her "investment clubs" would be placed in fixed-income notes and other investments. Instead of investing money as promised, Miller misappropriated client funds for her own personal use. She also convinced customers to invest in a purportedly safe mix of securities including corporate and municipal bonds. However, these investments may not exist at all. Investors in these vehicles may have received false statements listing securities holdings and values of securities that may not truly exist. For instance, some investors may have been misled into believing that they owned bonds issued by companies like McDonalds and General Electric and other municipal bonds."
Stoltmann explained "In most Ponzi scheme and theft cases there are red flags of potential misconduct. Brokerage firms who are confronted by 'red flags' of possible misconduct have an obligation to investigate and act. Reasonable supervision requires a firm to take action when a review of a customer's account shows abnormal activities in the account that should put the firm on notice of potential problems. On the other hand, if a firm is not following procedures designed to detect misconduct, and is therefore committing a supervision violation, the firm may never observe the 'red flags' that indicate possible misconduct. Red flags, often described as 'indications of violations' or 'suggestions of irregularities', may be viewed as indicators that should alert a person familiar with the operations of a brokerage firm that further investigation of specific conduct is necessary to protect against the transgression of established standards. Once such an indication or suggestion manifests itself, the need for prompt action arises. Often in Ponzi scheme, theft and selling away cases there are signs of potential misconduct that are either ignored or not followed up on. One way a brokerage firm can be held financially liable for the stolen or converted funds is if they failed to reasonably supervise the financial advisor."
According to Stoltmann, "The FINRA arbitration process or lawsuits can be used to potentially recover some, or all, of the investment losses or converted funds. We encourage victims to speak with an experienced securities lawyer in order to learn all contingency fee legal options available to them. To learn more about recovering these losses on a contingency fee basis, please visit www.PonziRecoveryCenter.com or call our securities fraud team at 312.332.4200 in Chicago, Illinois.