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
By  Bloomberg
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

Private equity in 401(k)s is 'inevitable,' says Meketa Capital CEO
Private equity in 401(k)s is 'inevitable,' says Meketa Capital CEO

Michael Bell explains how the PE push in retirement plans will benefit investors, why warnings around risks may be overplayed, and what it will take to get plan fiduciaries comfortable with private investments.

IRA rollovers from DC plans to hit $1.15T by 2030, LIMRA says
IRA rollovers from DC plans to hit $1.15T by 2030, LIMRA says

Research highlights the dominant role of workplace retirement plans and breaks down the major factors dictating workers' IRA rollover decisions.

GReminders unveils autonomous AI assistant for financial advisors
GReminders unveils autonomous AI assistant for financial advisors

The wealth tech firm is rolling out its "Do Anything" assistant as leaders and strategists tout the next evolution of artificial intelligence.

Court strikes down SEC CAT funding plan, puts broker-dealer costs under fire
Court strikes down SEC CAT funding plan, puts broker-dealer costs under fire

Appeals court overturns SEC’s CAT funding plan, broker-dealers face new uncertainty.

FINRA fines second broker-dealer over misleading communication with clients about crypto
FINRA fines second broker-dealer over misleading communication with clients about crypto

TradeStation Securities' communications violated industry rules, including falling short on describing the risks involved in investing in volatile crypto assets.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.