Rulebook

The Blotter Report: Life Behind Bars

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Booked on Elderly Fraud

A former LPL financial advisor should have followed his own advice. David Lisnek, a published author on investing and avoiding financial fraud, is behind bars after allegedly swindling $65,000 from an elderly client.

Officers with the Illinois Securities Department arrested Lisnek on Wednesday, charging the former advisor with financial exploitation of the elderly. According to a temporary restraining order from the agency, Lisnek told the woman to write checks to him personally in order "to avoid problems with the feds."

Prior to his arrest, LPL fired Lisnek when his registrations as an investment adviser and securities salesperson were suspended in a separate action by the Securities Department. Unless Lisnek requests a hearing, the temporary order—which prohibits Lisnek from offering and selling securities and from providing investment advice—will become final in 30 days.

 

Phony Hedging Strategy Goes Bust

The owner of a Virginia-based investment firm is set to spend the next 12 years in jail for an alleged $270 stock scam that bilked clients out of $35 million. William Dean Chapman was sentenced Friday after pleading guilty to the charges in May, according to the Department of Justice.

According to authorities, Chapman told clients he was hedging transactions against market volatility. But in reality, his firm Alexander Capital Markets sold the securities from customer orders and then gave 90 percent of the sales proceeds back to them as a purported loan. Over the course of seven years, Chapman’s scheme swindled 122 clients out of $35 million.

Chapman used his ill-gotten gains to purchase expensive toys including a Lamborghini and Ferrari, a $3 million, custom-build house in Great Falls, Va., as well as vacation homes in Turks & Caicos and Pompano Beach, Fla.

 

On the Outs

Our favorite celebrity advisor agreed to be banned from the securities industry as part of a deal to settle fraud charges.  Under the agreement with the SEC, Tommy Belesis, CEO of John Thomas Financial, is barred from working with brokers or penny-stock offerings. The deal also required the former executive and his firm to pay $500,000 each.

Belesis—who owes his celebrity status to his small role in “Wall Street: Money Never Sleeps”—was accused of defrauding investors of two mutual funds by using undue influence to steer fees to his brokerage. FINRA also has allegations pending regarding penny-stock fraud complaints.

The SEC says Belesis, who did not admit nor deny the allegations, can apply for the securities industry ban to be lifted after a year.

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Compliance, regulatory and legal issues, with a fair amount of cops and robbers for fun.

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