FINRA barred Charles Chul Nam of Tarzana, California and ordered the former Woodbury Financial Services, Inc. (Woodland Hills, CA) and MML Investor Services Inc. (Tarzana) associate to pay restitution in the amount of $352,750 to clients the Authority alleges Nam defrauded to the tune of $792,750.
Nam previously was associated with the 1717 Capital Management Company of Los Angeles (2004-2006), Mony Securities Corporation of New York (1995-1997; 1997-2004) and John Hancock Distributors, Inc. of Boston (1997).
Disciplinary Proceeding #2011026514001
According to the findings, Nam schemed to defraud five investors by selling the security "Wells Real Estate Investment Trust" (or, "Wells REIT"), falsely representing that he himself was affiliated with and accepting investments on behalf of the Wells REIT.
FINRA charged that through this fraudulent misrepresentation, Nam was able to obtain $792,750 in investments, $352,750 of which remains unrepaid.
Investigators determined that to effect the fraudulent scheme, Nam first filed a fake business name with Cailfornia to enable a company Nam owned and operated—Prime Capital I, LLC—to do business as Wells REIT. This move allowed Nam to receive and cash or deposit wire transfers and checks made payable to Wells REIT.
To further the false representation, Nam allegedly created a fictitious Internet website and telephone answering service, the website functioning under the domain "wellsfund.com," which was similar to the authentic Wells REIT domain of "wellsref.com."
Nam further misrepresented the business relationship between Prime Capital and Wells REIT by posting false information and selling points for investing in Wells REIT through Prime Capital.
Through his fraudulent scheme, Nam allegedly violated Section 10(b) of the Exchange Act, which makes Nam's alleged operation of a scheme employing a "manipulative or deceptive device or contrivance" unlawful.
Nam was specifically charged with making misrepresentations or omissions of material fact, acting with scienter (the "intent to deceive, manipulate or defraud"), engaging in such aforementioned misconduct as relates to a securities transaction and using interstate commerce, mails or facilities of any national securities change to effect the activity (Nam used both telephone lines and the Internet to perpetuate his fraud).
FINRA also charged Nam with conversion and misuse of funds, finding that Nam intended to "permanently deprive" the investors of their funds/securities. FINRA determined that Nam specifically used the investors' funds for his own personal use and purposes and provided false account statements with fictitious REIT-related positions to his investors in an attempt to conceal the misconduct.
Because Nam failed to provide information and appear for an on-the-record interview, FINRA opted for banishment and ordered restitution in a default decision.
According to Nam's BrokerCheck Report, one customer with alleged damages of $520,000 recently settled an arbitration claim against Nam for $35,000.
Additionally, another customer filed a 2011 complaint, alleging that while at Woodbury, Nam issued two promissory notes for a $400,000 loan and subsequently failed to repay the loan as promised.
A similar complaint alleging violation of New Mexico common law of fraud, breach of fiduciary duty, negligence and civil theft in connection with the REIT promissory notes is still pending.
Nam has also faced civil charges in the Los Angeles Superior Court relating to a Hartford Life Variable Life Insurance policy that also allegedly suffered from misrepresentation.
If you have invested with Charles Chul Nam, Woodbury Financial Services, MML Investor Services or with any other broker, representative or firm that has misrepresented, omitted material facts or otherwise defrauded or misappropriated and converted funds, and this illegal conduct has proven harmful to your investments or financial interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.