FINRA fined Avenir Financial Group $229,000, barred former CEO and Chief Compliance Officer Michael Todd Clements for fraud, and suspended registered rep Karim Ahmed Ibrahim (aka Chris Allen) for fraud, additionally ordering Ibrahim disgorge $25,000 in commissions while suspending the firm for two years from engaging in any self-offerings.
The decision follows an April 2015 cease and desist order in which FINRA ordered Avenir to stop selling to elderly customers, and barred broker Cesar Omar Rodriguez for fraudulent activity in using investor funds for personal expenses.
OHO Disciplinary Proceeding #2015044960501
In its decision, the extended hearing panel found that Avenir, and individuals Clements and Ibrahim, willfully misrepresented and/or omitted material facts related the firm's sale of Avenir equity interests. The panel also determined that Avenir made willful misrepresentations about the sale of debt and equity interests concerning a holding company.
Clements purportedly directed Ibrahim to raise capital from customers, without informing Ibrahim or the customers that the firm was in financial trouble.
As a result, one 92-year-old customer was told that his $250,000 investment would be used to grow Avenir and finance its day-to-day, and that his investment would be returned "in a very large amount."
During the investigation, Ibrahim purportedly admitted that he knew of Avenir's dire situation, yet failed to disclose this material fact to his elderly client. At the time of FINRA's 2015 order, the panel wrote that a portion of the $250,000 investment and/or other investments like it was indeed used to fill a $196,000 margin call.
In another example, Avenir broker Cesar Rodriguez—himself barred by FINRA in 2015—sold $100,000 in equity and promissory notes to a customer who had lost his daughter in a car accident and was investing the funds to provide for his six-year-old grandchild. Rodriguez and Clements both purportedly assured the customer of Avenir's "exceptionally well" performance, and likewise neglected to provide material information, such as the fact that Avenir at the time had recently been prohibited from conducting a securities business due to insufficient capital.
FINRA noted that Avenir and Rodriguez had raised over $173,000 from promissory notes and equity sales in Bull Run Capital Holdings, LLC, and used approximately $77,000 these proceeds to pay Rodriguez's personal expenses unrelated to firm business.
If you have invested with Avenir Financial Group, former CEO/CCO Michael Todd Clements, or brokers Karim Ahmed Ibrahim (Chris Allen) or Cesar Omar Rodriguez, or with any broker or financial adviser whose willful withholding of material information, misrepresentation, improper use or conversion of investment funds for unauthorized personal expenses, or other fraudulent conduct has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.