November 5, 2012 proved to be a significant day for financial regulators. In the U.S. FINRA announced the filing of a cease-and-desist order against WR Rice Financial Services and its owner, Joel Wilson for allegedly fleecing investors. In the U.K. the SFO announced the sentencing of a broker who admitted fleecing investors.

The FINRA proceeding was brought against the Michigan based financial services firm to halt on-going sales activity and the conversion of investor funds. Investors were solicited by the firm, its owner and representatives to invest in land contracts on residential real estate in Michigan which carried an interest rate of 9.9%. In fact the firm and its owner diverted the funds to make unsecured loans to companies owned or controlled by Mr. Wilson. Investors were also not told that there was no ability to pay the loans when they came due.

Mr. Wilson was also charged with providing fabricated documents to FINRA during its investigation and incomplete testimony. The proceeding will be scheduled for hearing.

In the U.K. the SFO announced that city stockbroker David Andrew Levene was sentenced to serve 13 years in prison after pleading guilty to 12 counts of fraud, one count of false accounting and one count of obtaining a money transfer by deception.

From April 2005 through October 2009 Mr. Levene solicited money from investors that was supposed to be invested in various securities. Instead he diverted the investor funds to his personal use. Over the period he raised about £250 million from investors. In part the money was used to repay investors which kept the scheme from being discovered for a period of time. In part it was diverted to pay for Mr. Levene’s personal expenses and travel.

The scheme unraveled when investors brought suit to recover their money. Subsequently, Mr. Levene was made the subject of a bankruptcy order. Investor losses are estimated to be over £32 million.

Hurricane Sandy: To aid the victims of Sandy’s destruction please donate to the Red Cross, here.

Seminar: The ABA’s premier program on securities fraud, the National Institute on Securities Fraud will be held on November 15 and 16, 2012 in New Orleans (here).