According to Ohio.com two former Ohio brokers, Jeffrey L. Gainer and Jerry A. Cicolani, Jr. are named in a major civil lawsuit filed by Securities and Exchange Commission (SEC) lawsuit for their involvement in an alleged Ponzi scheme that duped investors out of $20 million. The scheme involved the allegedly bogus oil and fuel company, KGTA Petroleum, set up by Thomas Abdullah and Kenneth Grant.
Between October 8, 2012 and February 2014, according to the SEC complaint, KGTA raised at least $20.73 million from investors. “Gainer and Cicolani found investors for KGTA, set up meetings with Grant and Abdallah, relayed information about KGTA to prospective investors, and obtained investor signatures on the agreements that memorialized the investment.” During that time, the complaint says Gainer and Cicolani were representative with Prime Solutions Securities, Inc. (“PSSI”) – a Cleveland-based registered broker-dealer.
The SEC accuses Gainer and Cicolani of acting as unregistered brokers and selling the notes to investors without a registration statement. Gainer and Cicolani allegedly sold directly to investors and hid the transactions from their broker-dealer employer, a practice known as “selling away.”
Furthermore, Gainer and Cicolani are accused of hiding from investor the “enormous fees” they were paid. The SEC complaint alleges Gainer and Cicolani were paid a combined total of $6 million in selling fees. “In other words, they have been paid approximately 29% of all funds raised from investors for KGTA.”
The SEC complaint also names Grainer’s wife, Nancy Gainer, and Cicolani girlfriend, Kelly Hood, as relief defendants alleging the massive fees were funneled through entities owned by the two women. Interestingly, Kelly Hood was also an employee of PSSI, according to the complaint, and “She is also the owner of Turnbury Consulting Group, LLC which received over $3.5 million from KGTA between October, 2013 and March 2014.”
According to the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck, Gainers’, Cicolanis’ and Hoods’ employment at PSSI was terminated. Cicolani’s has 68 customer disputes on his BrokerCheck report.
The White Law Group is investigating what liability PSSI may have for their employees actions. When a FINRA registered representative conducts business outside the scope of the brokerage firm where they are registered, the act can be considered “selling away.” If proven, the brokerage firm may be liable for negligent supervision of their broker representative and held responsible for investment losses in a FINRA dispute resolution claim.
If you suffered losses investing with Jeffrey L. Gainer and Jerry A. Cicolani, Jr. and would like to discuss your potential to recover your losses through a FINRA arbitration claim, please call the securities attorney of The White Law Group at (312) 238-9650 for a free consultation.
The White Law Group, LLC is a securities fraud, investor protection, and securities regulation/compliance law firm dedicated to the representation of investors in FINRA arbitration claims throughout the United States. Our offices are located in Chicago, Illinois and Vero Beach, Florida.
To learn more about The White Law Group, visit www.WhiteSecuritesLaw.com.