Arizona has long attracted wealthy retirees in search of sun and mountain vistas, settling across the state in warm climates like Tucson, Scottsdale, and Sedona. Unfortunately, fraudsters tend to follow affluent retirement communities. While investment fraud can happen to anyone, elderly retirees must be especially careful because seniors are more vulnerable and statistically more likely to be targeted than other groups. Senior investors need to be particularly wary, as not only are they extra vulnerable to exploitation, but they will also have a more difficult time recovering from investment fraud because of their age and having already left the workforce. The securities fraud law firm of Malecki Law has helped numerous senior investors recover their investment losses, whether lost due to fraud or Ponzi schemes, or just general negligent management of their nest egg by an investment professional. For over 25 years, Malecki Law’s investment loss lawyers have provided legal representation to investors victimized by financial fraud. The firm’s founder, Jenice L. Malecki, Esq. has recovered tens of millions of dollars for senior investors and retirees, and is a passionate advocate for underrepresented, in particular senior victims of financial abuse. This is an area that has held continued focus by national regulators such as the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC), as well as state regulators like the Securities Division of Arizona’s Corporation Commission.
Arizona’s Securities Division has been active in rooting out fraudsters who prey on investors and retirees in the state. In January 2022, for example, the regulator ordered more than $4.49 million in restitution for investors defrauded by a real estate investment scheme alleged perpetrated by Premier Asset Management Group LLC and other individual respondents hailing from Paradise Valley, Scottsdale, and Tempe. The respondents were found to have purchased high-end real estate lots to rent or sell, which they funded through the sale of promissory notes. The notes were marketed to investors via cold calls, promising yields higher than other investments. None of the respondents were licensed to offer or sell securities in Arizona. The regulator further found that the respondents had committed securities fraud by failing to disclose risks associated with the investments.
Similarly, in March 2022, the Arizona Securities Division found a resident of Mesa to have defrauded investors as part of a Ponzi scheme also involving real estate. The respondent and his affiliated company, Marketing Dynamics, Inc., were ordered to pay $84,216 in restitution, as well as a $20,000 administrative penalty for defrauding at least 22 investors, most of whom had little to no investment experience. “As a result, the Commission found many of the investors are now struggling financially, living month-to-month.”
While it’s encouraging that securities regulators try to go after wrongdoers, the above examples show that relying on restitution from regulators for defrauded investors who are now “struggling financially” is not likely to make an investor financially whole after becoming the victim of a fraud. Given the latter example and the relatively large number of investors (22) versus the small restitution amount ($84,216), it highlights that investor fraud victims often need to consider hiring experienced, investment loss recovery attorneys to bring a parallel civil lawsuit to try and recover a larger percentage of the financial loss, or at least the difference between the actual loss and the amount recovered by a regulator for restitution purposes.
It is surely a good thing that Arizona has an active securities regulator, but generally speaking, victims of financial fraud seeking to be made whole cannot solely rely on the outcome of a regulatory investigation. Regulatory investigations are long, opaque processes, which can take years, making them nearly impossible to know how (or if) they are proceeding towards eventual prosecution of the wrongdoer, let alone restitution towards the victims. Regulatory investigations also do not always seek to prosecute the full time period of the violations that occurred, meaning victims expecting restitution may only receive a small fraction of their losses that occurred during the narrower time period. Regulators want the “easy” win, so they will cut the time period for the violations if that happens to be where the best evidence is. This is why it is critical for investors who have been victimized to additionally seek counsel from securities arbitration lawyers and an experienced, investment loss recovery law firm to consider pursuing a parallel civil lawsuit against the financial institution or wrongdoer in question.
Regulatory investigations also typically seek documents and cooperation from investor victims, but they usually do not return the favor by sharing documents in return regarding other investors who may have suffered similar losses – this is a big deal. One investor losing money can have the appearance to a fact finder of the investor being responsible for the loss, such as making a bad investment decision or disregarding a disclosed risk. But two or more investors losing money starts to point to evidence of a scheme and broader wrongdoing, giving the finder of fact (i.e., a judge or arbitrator) more to consider as to whether the investor who lost money is truly a victim of someone else’s wrongdoing.
Another consideration for investor victims is the speed with which a dispute is resolved. For example, in FINRA Arbitration, the forum where most retail securities disputes are required to take place, investor victims can expect their cases to be resolved within 12 to 15 months depending on the availability of arbitrators and the parties’ counsel, far faster than most regulatory investigations reaching a conclusion. Arbitration also has very few grounds for appeal, whereas court proceedings can drag on for years in the appeals process. Elderly and disabled investors may also qualify for expedited proceedings in FINRA Arbitration, which can bring a resolution even several months faster.
Malecki Law is a national securities fraud law firm that has recovered tens of millions of dollars for investors from some of the largest financial firms. Hiring knowledgeable, investment loss recovery lawyers is the first step towards assessing one’s options and recovering investment money lost to negligent firm supervision or other misconduct. If you are an Arizona retiree or senior investor who has lost money in the financial markets and would like a free consultation about whether your account was properly managed, contact us at Malecki Law. Many of our clients choose a contingency fee arrangement, meaning we do not get paid unless we make a financial recovery for you first.