Securities fraud victims face new scam
A purported New York law firm has been trying to “revictimize” securities fraud victims in two cases brought by the California Department of Business Oversight, said Tom Dresslar, a spokesman for the department.
The firm, Fletcher & Associates, allegedly told investors it had been retained by the state to distribute court-mandated restitution funds. But before investors could get the money, they had to pay Fletcher a large fee and sign papers releasing the companies from all past, present and future claims.
None of the four attorneys listed on the Fletcher & Associates webite are licensed in the states they claim to be licensed in. The firm and its lawyers did not return phone calls.
Under “Our Cases,” it describes about two dozen lawsuits it was involved in, but the descriptions are virtually identical to those on the website of another New York law firm, Lifshitz & Miller. Joshua Lif- shitz said he has never heard of Fletcher but gets calls occasionally about other law firms plagiarizing his site.
The state never hired Fletcher or any other firm to distribute restitution funds, Dresslar said. This seems to be a “particularly egregious” type of asset-recovery scam,
where firms cold-call people, usually investors, and offer to help them recover money for a fee, and then do nothing.
The department, California’s securities regulator, has received complaints about Fletcher from investors in Leland Energy and Synergy Oil.
In 2012, Leland agreed to pay almost $1.4 million in restitution to investors over four years to settle an administrative action brought by the department. It alleged that Leland’s sale of securities contained misrepresentations and omissions of material fact. Leland, from Beverly Hills, did not admit nor deny guilt and is making those payments.
In June 2014, the department got a court judgment against Synergy Oil of Oklahoma and its manager Robert Falco, ordering them to pay $13.8 million in restitution to investors and $6.6 million in penalties to the state for illegal sales and fraudulent marketing of oil and gas investments. None of that money has been paid, Dresslar said.
Mike Mitchell of Bella Vista, Ark., invested $50,000 in Synergy. He was told he would recoup his investment in 12 to 16 months, but got less than $6,000 in monthly payments before they ceased.
In early April, he got a call from a man identifying himself as John Spencer, a lawyer with Fletcher. Spencer told him Fletcher “had been mandated by California to refund monies to investors,” Mitchell said in a phone interview. “They said they had recovered $8.25 million, that was about 60 percent of the total. They were contacting all the investors, but in order to get this money, which could take up to 90 days, we would be required to sign a settlement agreement and a discharge agreement,” that waived right to future legal actions against Synergy and Falco.
Mitchell was told he would get 60 percent of his investment, or $30,000, but would owe Fletcher $7,500 in legal fees including a $3,500 retainer/deposit. A few days later he got an email from Fletcher with the discharge agreement, but instead of sending it back, he contacted the department.
The department was also contacted by Robert and Karen Hamers of Fort Pierce, Fla., who had invested $450,000 with Leland.
Robert Hamers said he got a “cold call out of the blue” from Robert Fletcher, saying his firm had $6.5 million set aside in a Bank of America trust account to pay Leland investors, but they too had to sign away their rights and pay Fletcher a large fee to get it.
Hamers said he was aware of the action filed in California, but Fletcher told him this was money from a separate settlement to compensate victims outside of California and Colorado. (Colorado’s securities regulator filed a separate action against Leland resulting in $700,000 in restitution.)
When Hamers asked Fletcher to show him a copy of this settlement, Fletcher said he could not until the Hamers signed the documents and paid a fee. The Hamers were supposedly entitled to a $315,000 settlement, but would have to pay Fletcher $90,000 in fees including $20,000 up front, which was later reduced to $10,000 after Hamers objected.
Karen Hamers investigated the lawyers, discovered that none was licensed and contacted the department.
Although court documents named investors eligible for refunds in the Leland and Synergy cases, neither Mitchell nor the Hamers were listed. They do not know how Fletcher got their names and neither does the department.
The department is- sued a warning in March, saying that investors in Leland Energy had received calls from people claiming to be New York lawyers hired by the state to distribute funds from its 2012 settlement. But it did not name the law firm and had not yet received calls from Synergy investors.
The department cannot investigate these cases because they do not involve securities fraud, but has turned the information over to the California attorney general’s office. That office and the New York attoney general’s office declined to comment.