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Published: November 17 2012

FORT LAUDERDALE, FL -- These days, South Florida is known for many things. The sunny weather. The Miami Heat. Good golf. Unfortunately, you need to add securities fraud to that list. Over the past several years, South Florida has earned a reputation as a hotbed of securities fraud, investment scams and Ponzi Schemes.

Everyone in Fort Lauderdale has heard of Scott Rothstein, known by many as the mini-Madoff. Rothstein is the disgraced former Fort Lauderdale attorney who ran a $1 billion Ponzi scheme that focused principally on selling investments in non-existent lawsuits. But securities fraud in south Florida goes far beyond the Scott Rothstein scandal. Unfortunately, investment scams in Fort Lauderdale and Miami have become par for the course.

This fall, the Securities and Exchange Commission charged three South Florida men with running a $30 million fraudulent investment scam. According to the complaint, the perpetrators – James Howard, Louis Gallo and Michael Casey – orchestrated the fraud through two different companies: Commodities Online LLC and Commodities Online Management LLC. The pitch: The companies provided a means for investors to purchase shares in "pre-sold" commodities contracts with a guaranteed profit. Once again, just to be clear: The perpetrators essentially told investors: We have these commodities contracts for oil, seafood, iron ore, precious metals. All of these contracts have already been sold. We have already brokered the deals between buyers and sellers. You can invest in the brokerage aspect of the deals and reap a profit. Of course, the investments were not sold on an exchange. Instead, they were sold in private transactions known as private placements. It gets better. One of the key perpetrators – Louis Gallo – had previously been convicted of bank fraud, for which he was serving a term of supervised release, all during his tenure at Commodities Online. And in 2010, fellow ringleader James Howard had to step down from his role with the company after his arrest in an entirely different securities fraud matter.
The Commodities Online scam is hardly unique. Fraudsters in south Florida are routinely busted for perpetrating these types of schemes. Just last week, news broke about a $10 million Ponzi scheme run by a 25 year old former Florida Atlantic student Donald French. Apparently, French has been conning local residents for the past four years, promising returns of up to 50% a year from investments in foreign currency, jewels and even a solar energy project based in Italy.
People should always be cautious about making investment decisions. Although it is not always possible to spot an investment scam or a Ponzi scheme, there are certain red flags that might suggest fraud. Some of the most common red flags include:

• The investments are sold via private placement instead of on a major exchange
• The investment manager lacks investment experience or has a checkered past
• You are promised guaranteed returns or a no-risk investment
• The investment pitch simply does not make sense
• Little or no publicly available information about the company
• Lack of a reputable auditor or accounting firm
• You are promised returns that are too good to be true

Before you make any investment decision, consult with your investment advisor or attorney. And if you feel that you have been a victim of investment fraud, contact an attorney immediately to discuss your rights

Pollard LLC
Jonathan Pollard is a trial lawyer and litigator based in Fort Lauderdale, Florida.  He focuses his practice on cases involving employment disputes, antitrust and business torts.

401 E. Las Olas Blvd. #1400 Fort Lauderdale, Fl 33301
www.pollardllc.com