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.

Our senior attorney at Banks Law, Robert S. Banks Jr., posted a comment on the article online:

“While I have compassion for ponzi victims and have often represented them against wrongdoers, I find it unfortunate that filing clawback lawsuits against good faith investors has become so routine for receivers. Indeed, this article states that the receiver has no choice but to file the cases. We represent a group of clawback defendants in the Meridian Mortgage cases filed in Seattle, and there the receiver tried to strong arm all “net winners” to pay back all of their interest paid to them, even if the last payments were as far back as 2004 and even if their “net winnings” were as little as $900. Many of these innocent investors don’t have the money anymore, many are elderly, and most are living in fear of what might happen if they lose. Our clients in the Meridan cases live all across the nation, and all are being sued in Seattle. Many of the innocent defendants have valid legal defenses based on statute of limitations and lack of proof of a ponzi when they got their payments, but unless they are represented as a group, they can’t afford to fight these lawsuits, most of which are seeking under $100,000. Receivers need to think about the consequences of their actions before bringing clawback actions against good faith investors, and courts need to apply the law and sanction receivers who file the cases without good legal basis and without regard to the costs to the estate for filing.”

For nearly thirty years, the Banks Law Office PC has developed a focused practice in financial litigation, winning awards and settlements in the tens of millions of dollars against major Wall Street firms, small brokerages, investment advisors, financial planners, and others.

Our clients have included judges, NBA basketball players, construction workers, credit unions, retirement plans, securities regulatory agencies, and large investor groups. We have a single mission for every client: getting their money back. Contact Banks Law Office now for a free, confidential evaluation at (503) 358-8292.

Meridian Mortgage investors were unpleasantly surprised to receive a letter from the K&L Gates law firm demanding that they repay interest and dividends they may have received from their Meridian Mortgage investments (Seattle Times on the web 29 April 2012). A Banks Law Office client received such a letter, which threatened to sue him for the amount of his entire Meridian Mortgage investment unless he agreed to pay approximately $90,000 in dividend payments that he received – and cashed – in good faith. Banks Law Office is defending him against that claim (US Bankruptcy Court 10-17952). According to the Seattle Times, 182 investors received that letter. Investors should not agree to make any payment until they have consulted with a professional who can explain their rights.

According to investor attorney, Robert S. Banks, Meridian investors may have defenses in response to the Meridian trustee’s demands. Some of the available defenses include:

Statute of Limitations. The claims may be time barred by the applicable statute of limitations. The statutes can be complicated, but under the federal Fraudulent Transfer Act, the trustee can only avoid a transfer that “was made or incurred on or within 2 years before the date of the filing of the [bankruptcy] petition.” The Meridian petition was filed in July, 2010. Under Washington’s Uniform Fraudulent Transfer Act, which may also apply, the claims against investors must be brought “within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant.” Most of the payments to investors were made more than four years ago. Under the Washington law, then, the question is whether the trustee “could reasonably have discovered” fraud at Meridian Mortgage more than one year ago. Certain bankruptcy statutes may affect the application of the statutes of limitation.

Pre-Ponzi Scheme Payments. The fraudulent transfer laws only apply to transfers made to investors if the company is acting as a Ponzi scheme. Unless the trustee can prove that payments to you were made while Meridian was operating as a Ponzi scheme, your payments are not subject to any fraudulent transfer claims.

Good Faith Defense. Additionally, many Meridian investors also are entitled to consider and present the “good faith defense,” which is recognized by Washington law, and says that if an investor acted in good faith and exchanged reasonably equivalent value for their investment and return, they are not subject to the trustee’s clawback.

Banks stressed that no investors should rely on this short article to fully inform them of their rights on a complicated legal matter. The defenses will depend on an investor’s individual circumstances. Banks Law Office, with help from Washington bankruptcy counsel, is speaking with investors facing claims by the Meridian trustee

For nearly thirty years, the Banks Law Office PC has developed a focused practice in financial litigation, winning awards and settlements in the tens of millions of dollars against major Wall Street firms, small brokerages, investment advisors, financial planners, and others. Our clients have included judges, NBA basketball players, construction workers, credit unions, retirement plans, securities regulatory agencies, and large investor groups. We have a single mission for every client: getting their money back. Contact us now for a free confidential evaluation at (503) 358-8292.

Meridian investors have defenses in response to the Meridian trustee’s demands. Here are some of them:

Statute of Limitations. The claims may be time barred by the applicable statute of limitations. The statutes can be complicated, but under the federal Fraudulent Transfer Act, the trustee can only avoid a transfer that “was made or incurred on or within 2 years before the date of the filing of the [bankruptcy] petition.” The Meridian petition was filed in July, 2010. Under Washington’s Uniform Fraudulent Transfer Act, which may also apply, the claims against investors must be brought “within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant.” Most of the payments to investors were made more than four years ago. Under the Washington law, then, the question is whether the trustee “could reasonably have discovered” fraud at Meridian Mortgage more than one year ago. Certain bankruptcy statutes may affect the application of the statutes of limitation.

Pre-Ponzi Scheme Payments. The fraudulent transfer laws only apply to transfers made to investors if the company is acting as a Ponzi scheme. Unless the trustee can prove that payments to you were made while Meridian was operating as a Ponzi scheme, your payments are not subject to any fraudulent transfer claims.

Good Faith Defense. Additionally, many Meridian investors also are entitled to consider and present the “good faith defense,” which is recognized by Washington law, and says that if an investor acted in good faith and exchanged reasonably equivalent value for their investment and return, they are not subject to the trustee’s clawback.

No investor should rely on this short article to fully inform them of their rights on a complicated legal matter. Your defenses will depend on your individual circumstances. This is meant to provide some helpful background on the legal controversy to those investors without legal counsel. Our firm, with help from our Washington counsel, are speaking with investors facing claims by the Meridian trustee. Contact us for a free initial consultation about joining our Meridian Investor Group.