THREE MORE TRADERS IMPLICATED IN GRIFPHON PONZI SCHEME

As reported in a December 6th article in The Oregonian, the Securities and Exchange Commission has charged three more men with securities violations in connection with Grifphon Asset Management. The Grifphon Alpha Fund was the $37 million hedge fund scheme run by Yusaf Jawed from offices in Portland, Oregon that has now resulted in a number of SEC charges.

The three newly implicated men are Dominic O’Dierno of Portland, Stephen Persad of Milwaukie, and Benjamin R. Daniels of Indio, California. These three funneled 40 investors and a total of $16 million into the scheme, acting as brokers while unregistered. Although they were not accused of having knowledge of or aiding the fraud, Jawed paid them an enormous $800,000 in commissions. Daniels’ commissions were more than 6.6% of the amount he brought in. The three have settled with the SEC and each are barred from the investment industry for three years.

Banks Law Office was the first firm to write about its investigation into Grifphon. In fact, we began representing investors seeking to recover money they entrusted to Yusaf Jawed more than ten years ago. We currently have two pending cases against Raymond James to recover Grifphon investments that were sold by Ben Daniels, who was based in Raymond James’s Palm Springs, California office at the time. We continue to talk with investors who fell victim to the Grifphon investment scheme.

Anyone who sustained investment losses through dealings with Dominic O’Dierno, Stephen Persad, or Benjamin Daniels, are encouraged to contact us and share your story. We may be able to help.

Now that we have completed two cases, we are assisting the Securities and Exchange Commission by providing information about Grifphon, which was operated by Jusaf Jawed and his associates. We have encouraged the SEC attorneys to take action and seek prison terms for all wrongdoers. We will volunteer whatever time is necessary to see justice done.

If you have questions or concerns about Grifphon, Mr. Banks is available to discuss your situation.

We have focused our claims on financial advisors, brokerage firms and banks that recommended Grifphon investments to our clients. Our claims assert that those advisers and financial companies did not do their homework or “due diligence” before making the Grifphon recommendation. We have alleged and intend to prove that they failed to tell our clients that they were investing money with an individual and group that had a history of violating investor protection rules. Currently, we are fighting to require Grifphon to produce records showing what happened to investors’ money, which we believe investors are entitled to know. Grifphon’s principals have also refused to honor subpoenas we had issued by a FINRA arbitration panel that require them to produce records. We are now seeking a court order requiring Grifphon to comply with the FINRA subpoenas. We expect a hearing on this issue in court in the near future.

We remain interested in speaking with investors who purchased Grifphon investments as a result of recommendations from financial advisors. Please contact us for a confidential conversation.

Our clients are in California and Oregon. Four of the claims will be tried to a FINRA arbitration panel in Portland, Oregon, later this year. Another case will be filed in state court in Palm Springs, California.

A Portland hedge fund is on the verge of liquidating its assets and restructuring after settling a major lawsuit with one of its investors.

Husband and wife Edward and Linda Gilbert sued Yusaf Jawed, owner of the Pearl District hedge fund Grifphon Asset Management LLC, in December 2009 for roughly $300,000.

The case was scheduled for trial this week, but settled before the five-day proceedings started.

The hedge fund’s attorney, Robert J. Custis, declined to give details about the settlement, but said the Gilberts “got their redemption amount.”

Custis said the hedge fund’s problems arose when investors started demanding more liquidity, not uncommon in a post-Bernie Madoff world.

Jeffrey Edelson, an attorney at Markowitz, Herbold, Glade & Mehlhaf PC who represented Jawed and Grifphon in the lawsuit, declined to provide any details about the settlement.

“There’s no admission of wrongdoing,” he said. “It’s a private, confidential settlement.”

Grifphon has also reached a deal to sell all of the assets in the four funds it manages, Custis said. The firm plans to restructure its offerings so future investors have more liquidity.

“What Grifphon learned is that liquidity is of high importance to most people,” Custis said.

Attorney Bob Banks, who represents another couple that’s trying to withdraw its money from Grifphon, is skeptical that other investors will get their money back.

“We’ve heard that for quite some time now,” he said. “My clients asked for their money back in February. We get these monthly excuse letters consistently. It would be wonderful if they were going to be able to pay our clients back but I’m rather skeptical about that happening. If the funds are as successful as they said they are, why are they folding them up?”

In their complaint, the Gilberts said Jawed previously promised a new $1.78 billion investment that would be used to cash at all investors.

Hedge funds are investment vehicles for the wealthy that often use their lightly-regulated status to hide investment strategies from competitors. They also often require investors to commit their money for a specific period of time because they take complex trading positions that can be tough to unwind.

The Gilberts invested $209,000 in a hedge fund managed by Jawed and Grifphon on Oct. 1, 2006, according to the couple’s complaint. Grifphon attorney Custis said the Gilberts originally agreed to keep their investment with Griphon until 2016, allowing the fund to invest in illiquid securities like real estate.

The Gilberts eventually sought more information about how their investment was being used. After getting unsatisfactory answers, Jawed agreed to buy out their investment in an agreement reached on March 25, 2009, according to the Gilberts.

In a counterclaim against the Gilberts, Jawed said the couple requested financial documents “to which they had no right.” He also denies that he agreed to cash out their investment early.

The Gilberts and their attorney, Kim Buckley of Esler, Stephens & Buckley, declined to comment.

The Gilberts also alleged that Jawed didn’t disclose his history of regulatory and civil litigation to investors. Jawed has been sued “on multiple occasions for violations of the Oregon Securities Act,” the Gilberts said in their complaint.

A records search shows the New York Stock Exchange suspended Jawed for three months for trading without a customer’s written permission in 2002.

David Tatman, the administrator of the Division of Finance and Corporate Securities, confirmed that the state is actively investigating some hedge funds, including Grifphon and Jawed.

Grifphon attorney Custis said the problems are near an end.

“Everything I see says we’re gonna have a good holiday.”