GunnAllen, Questar, Bluestein named in suit

An alleged Ponzi scheme ran for 12 years and defrauded 1,000 investors of $350 million.
MAR 07, 2008
GunnAllen Financial Inc., Questar Capital Corp. and a former broker affiliated with both firms, Frank Bluestein, allegedly were involved in a massive Ponzi scheme that ran for 12 years and defrauded 1,000 investors of $350 million, according to a class action lawsuit filed earlier this week. Mr. Bluestein and his practice, the Maximum Financial Group Inc., “facilitated the scheme over the years with the assistance” of Questar and GunnAllen, according to the complaint, which was filed on Tuesday in U.S. district court in Detroit. The complaint centers on the sale and distribution of unregistered securities created by Edward May, whom the Securities and Exchange Commission charged in November with allegedly offering sham deals to investors in the form of shares of bogus Las Vegas casino and resort telecommunications contracts. About 1,200 investors, many elderly, bought into the scheme, according to the SEC. Mr. May, who has declared bankruptcy, is not named in the class action suit. Mr. Bluestein was affiliated with Questar from 2000 to 2005, when he joined GunnAllen. He was affiliated there until October. Two investors, a retired Chrysler plant manager Donald Haase and his son, Douglas, were named as lead plaintiffs in the claim, which has to be approved by a judge to go forward. “Mr. Bluestein did not know this was a Ponzi scheme,” said his attorney, David Foster. “If he did, he never, ever would have recommended this to anyone.” Mr. Foster said that Mr. Bluestein and his family also lost money because they invested with Mr. May, although he declined to say how much. David Jarvis, general counsel for GunnAllen, which is based in Tampa, Fla., and Hubertus Kuelps, spokesman for Questar of Minneapolis, did not return to calls to comment by deadline.

Latest News

How AI search aided scam from phony NFL player, fake financial advisor
How AI search aided scam from phony NFL player, fake financial advisor

Daejon Love and Taylor Chan's $1.3 million romance fraud scheme exposes how AI search engines can be manipulated by fabricated online identities

Schwab ordered to pay clients $1.34 million in crypto dispute involving elderly client
Schwab ordered to pay clients $1.34 million in crypto dispute involving elderly client

“It was a third party scam,” said the attorney representing the claimants.

RIA moves: Mercer adds to Atlanta presence with veteran advisor from Northern Trust
RIA moves: Mercer adds to Atlanta presence with veteran advisor from Northern Trust

Meanwhile, &Partners draws another Commonwealth practice, and Wealthcare welcomes a $550 million planning practice in the Northeast.

CogniCor adds wealthtech veterans to board in renewed RIA push
CogniCor adds wealthtech veterans to board in renewed RIA push

Palo Alto AI platform recruits RIA and fintech leaders as industry data show AI adoption reshaping advisor staffing.

Advisor moves: Merrill draws $1.2 billion UBS team in New Mexico
Advisor moves: Merrill draws $1.2 billion UBS team in New Mexico

Meanwhile, Raymond James, Wedbush, and LPL recruited veteran advisors from across Texas, North Carolina, and California.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income