Boston Accident and Injury Lawyer

October 19, 2010 – Bruce Prevost and David Harrold allegedly filtered over $1 billion from their hedge fund firms Palm Beach Capital Management LP and Palm Beach Capital Management LLC to the Thomas Petters investment scam. The Securities and Exchange Commission (“SEC”) filed a complaint that alleges from approximately 2004 through June 2008, Prevost and Harrold invested all of their clients’ money in the Petters scam while taking over $58 million in fees for themselves.

Petters’ firm, Petters Company, Inc., allegedly told investors that it used their money to purchase large quantities of consumer electronics and resold them to large retailers like Walmart and Costco. The SEC claims that Petters Company did not purchase any actual electronics and merely operated as a massive Ponzi scheme. The complaint alleges that Prevost and Harrold invested all of their clients money in the Petters scheme, while falsely claiming their money was collateralized by other accounts.

The SEC further alleges that Prevost and Harrold told their investors that the retailers’ payments for the electronics went directly into accounts that would pay off promissory notes held by the Palm Beach Capital investors. In reality, the SEC claims that return payments to investors came from Petters’ company, which was ostensibly other investors’ money.

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September 30, 2010 – Benjamin Lee Grant, of Boston, Massachusetts, allegedly ran his brokerage firm, Sage Advisory Group, LLC, as a massive investment scam. The Securities and Exchange Commission (“SEC”) filed a complaint that alleges Grant fraudulently enticed more than 300 customers with over $100 million in assets to join his firm. Apparently, Grant recruited clients whose accounts he managed at his former employer, Wedbush Morgan Securities, shortly after his departure in September 2005.

The SEC claims that Grant was a registered representative of Wedbush and almost all of his accounts were by First Wilshire Securities Management, a California investment adviser. Apparently, days after resigning from his position at Wedbush, Grant sent a letter to his former clients on October 4, 2005 advising them that they should switch their accounts to his new operation, Sage. The complaint alleges that Grant’s letter told his former clients that Sage was formed solely to manage their funds and First Wilshire suggested moving their accounts from Wedbush to a discount broker, Charles Schwab & Co.

Grant’s letter also allegedly advised clients that a new fee and commission structure called a “wrap fee” was cheaper according to First Wilshire. The complaint also claims that Grant subsequently told clients that First Wilshire was no longer willing to manage their assets at Wedbush and they had to switch to Sage.

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