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SEC Charges New York RIA With Pushing Unregistered Securities

A New York-based RIA raised more than $75 million from hundreds of investors after soliciting unregistered securities offerings without approval from their registered broker/dealer, while failing to tell clients the firm owed about $750,000 to the company connected to the unregistered offerings, according to new charges from the Securities and Exchange Commission (SEC).

The commission filed its complaint in federal court in New York’s Eastern District against Massapequa, N.Y.-based A.G. Morgan Financial Advisors (AGM), as well as owner Vincent Camarda and former CCO James McArthur. The charges stem from their selling unregistered offerings related to Complete Business Solutions Group, also known as Par Funding. In 2020, the SEC charged Par Funding with defrauding investors by raising nearly $500 million from about 1,200 investors around the country with unregistered securities.

According to the SEC complaint against AGM, the firm registered with the commission in 2012 and managed about $215 million in assets. From 2014 on, Camarda was a registered rep with a number of broker/dealers, including American Portfolios Financial Services, Traderfield Securities and, since March of last year, IBN Financial Services.

Between 2012 and 2020, Par Funding funded short-term loans to small businesses, often selling promissory notes as unregistered securities, according to the SEC. Starting in 2016, AGM entered into a loan agreement in which Par Funding loaned the firm about $775,000 on “future receivables” from AGM’s advisory profits. AGM took out a second loan in Feb. 2017, with assurances that it would make daily payments to Par Funding.

According to the SEC’s timeline, Camarda first emailed Par Funding about missed payments in June of 2020, stating AGM’s cash flow was “very inconsistent” and that it couldn’t make upcoming loan payments. Camarda allegedly believed that the Par Funding loans were essential to keeping the firm’s doors open. In July, Camarda met with Par Funding staff about soliciting investors for its unregistered securities offerings. Starting in August, the firm raised over $75 million from investors for Par Funding’s unregistered offerings, speaking with clients in person or by phone and touting the securities as a “low risk investment.”

However, American Portfolios did not approve of Camarda and McArthur’s outside business activity, so Camarda reached out to Joseph LaForte, Par Funding’s de facto CEO, who put them in touch with Traderfield; LaForte told them the broker/dealer was “100 percent clean” (Traderfield itself didn’t approve of the outside business activity until Sept. 2019, according to the commission). AGM declined to comment on this story.

In 2020, the SEC obtained a restraining order and asset freeze against Par Funding, charging Joseph LaForte and his wife Lisa with raising funds through unregistered securities offerings. 

According to the SEC’s complaint, the couple’s loans to small businesses often charged more than 400% interest, and they used unregistered sales agents to sell promissory notes while misleading investors about how the funds would be used, as well as about LaForte’s previous guilty pleas for grand larceny, money laundering and conspiracy to operate an illegal gambling business.

The SEC is seeking permanent injunctions, as well as fines in the form of disgorgement, prejudgment interest and civil penalties, arguing the firm failed its fiduciary duty by not disclosing to clients that it had a conflict in pushing the unregistered securities due to the debt it owed Par Funding.

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