Brokers bilked investors out of $36M selling CMOs, SEC charges
The Securities and Exchange Commission today charged 10 brokers who worked for the former Brookstreet Securities Corp. of Irvine, Calif., with fraud.
The SEC’s complaint alleges that the brokers falsely marketed investments in derivatives of mortgage-backed securities as safe and suitable for retirees and others with conservative investment goals.
The brokers earned millions of dollars in commissions and salaries from the collateralized mortgage obligations and investors lost millions, the SEC said in a statement.
Those charged were: Florida residents William Betta Jr., James J. Caprio, Troy L. Gagliardi, Barry M. Kornfeld, Clifford A. Popper, Alfred B. Rubin and Steven I. Shrago, Travis A. Branch of Hawaii, Russell M. Kautz of Oregon and Shane A. McCann of Montana.
According to the SEC’s complaint, the defendants defrauded more than 750 customers, costing them more than $36 million in losses.
The brokers received an aggregate $18 million in commissions and salaries related to the investments, the SEC said in the statement.
“My client was a salesman and he sold packages that everybody knew about including the Federal Reserve Board,” said Gary Victor Dubin, of Dubin Law Offices of Honolulu, who is representing Travis Branch.
“He [Mr. Branch] and his family lost more than $ 1 million. He had 12 clients that he put into these investments and almost everyone supports him. Everyone knew how these things were being sold. Now with the bubble being burst, the government is looking for scapegoats.”
Dan Newman, a partner with Broad and Cassel of Miami, who is representing Steven Shrago, had no comment.
None of the other named attorneys representing the defendants or individuals without representation were immediately available for comment.
The SEC complaint was filed in U.S. District Court in West Palm Beach, Fla.
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