FINRA charges VFG Securities with Fraud
Jason Bryce Vanclef fist became registered with the Financial Industry Regulatory Authority in 2006, and since that time, he has been the subject of no less that seven customer initiated investment related complaints alleging fraud, and most recently on February 6, 2016, a FINRA regulatory action also alleging fraud in connection with the sale of Direct Participation Programs and non-traded Real Estate Investment Trusts.
In 2009, Vanclef acquired a New York based broker-dealer, and ownership of VFG Securities, Inc. through the Vanclef Financial Group changed the Firm’s name to VFG Securities, Inc. in September 2009. Vanclef has a degree in biology, but decided to enter the securities business after working in law enforcement. Vanclef appears to have entered the securities businss in 2006 when he became assocoated with Sigma Financial, where surprisingly, he was subject to a customer complaint.
Vanclef also purports to have several professional designations, including Graduate Estate Planning Consultant (GEPC), Certified Estate Planner (CEP) and Registered Financial Consultant (RFC) professional designations.
The “RFC” professional designation appears to be a highly coveted designation and also appears to be only available to members the International Association of Financial Consultants, located in 6784 Ayala Ave. cor. Rufino St., Legaspi Village, Makati City, Philippines 1229. (See also, FINRA Notice to Members 07-43, Sept. 2007 (“proliferation of professional designations”)).
VanClef is the president, CEO and CCO of VFG Securities, Inc. VFG Securities, Inc. principal place of business is in Culver City, California. It supposedly has thirteen registered representatives operating from six branch offices, including Plano, Texas, Thousand Oaks, California, Atascadero, California, and Carlsbad, Carlsbad California.
Of the eight registered representatives shown on the VFG Securities website, Edward L. Price, Demetrio J Munoz III, Linda Wimsatt, Scot A Clevenger, Kim R Kunz, John Brady, Christopher Dukes, Mark Trewitt, according to FINRA Public Disclosre Records, five have been subject to customer complaints, and the firm’s Chief Compliance Officer, Edward L. Price, before joining VFG Securities, was asociated with two brokerage firms, TNP Securities and Capwest Securities, both of which were expelled from FINRA.
In any event, at or about the same time Vanclef appears to have passed his Series 24 principals exam, and acquired VFG Securities, in 2009, Vanclef began to distribute the first edition of his self published book: “The Wealth Code: How the Rich Stay Rich in Good Times and Bad.”
Vanclef is believed to have distributed several thousand copiesof his book free of charge to clients and
potential clients in one-on-one meetings, at seminars, and during golf tournaments.
At least according to the 2013038283001lodged against Vanclef and VFG Securities by FINRA, Vanclef used The Wealth Code as sales literature to promote investments in nontraded Direct Participation Programs (“DPPs”) and non-traded Real Estate Investment Trusts (“REITs”), and to lure potential investors to VFG.
A DPP is a program that allows investors to participate in the cash flow and tax benefits of an underlying investment, such as oil and gas programs, real estate programs, agricultural programs, cattle programs, condominium securities, and others. A REIT is a corporation, trust or association that owns (and might also manage) income-producing real estate, such as office buildings, shopping centers, hotels, and apartments which the typical investor may not otherwise be able to purchase individually. Non-traded DPPs and non-traded REITs are securities that do not trade on any national securities exchange and are illiquid.
Notwithstanding the foregoing, Vanclef repeatedly claimed in “The Wealth Code” that non-traded DPPs and non-traded REITs offer both high return and capital preservation. According to this book, supposedly, investing in “real” or “tangible” assets, i.e. DPPs and REITs, investors could “reasonably achieve 8-12% results,” on their investments and “get consistent returns” that provided “piece of mind.”
Vanclef’s claims, at least according to FINRA, were false and misleading, and contradicted disclosures contained in the prospectuses for the non-traded DPPs and non-traded REITs were speculative and contained a high degree of risk, including the loss of an investor’s entire investment.
The FINRA complaint sets out many of the false and misleading statements made to investors in Vanclef’s book, and FINRA also alleges that as advertising, the book was never approved by a principal nor provided to FINRA, as required for generally new firms, prior to use.
As part and parcel of their pitch, VFG brokers are alleted to have solicited investors to buy DPPs and REITs through the use of spreadsheets, showing a projected total return goal, distribution goal, and monthly and yearly expected income for each proposed investment. The spreadsheets also are alleged to contradict the prospectuses for certain non-traded REITs and non-traded DPPs.
VFG Securities audited financial statements filed with the United States Securities & Exchange Commision reports that for the year ended June 2015, the company reported $4.1 million dollars in revenue, 95% of which FINRA alleges was obtained through the sale of DPPs and non-traded REITs.
Of course, Vanclef denies any wrongdoing. In an interview with Investment News, Vanclef said that:
Finra had been “persecuting” him since an exam of the firm in 2012, when Finra began to focus on the firm selling illiquid alternative investments. Finra’s investigation has been an attempt at “xaracter assassination”and “a absolute persecution,” e said, adding that the cost of Finra’s investigation to the firm has been close to $500,000.
According to Vanclef:
“We design portfolios for clients and what they need, not what a regulator in Washington is telling us what they need.”
In light of the foregoing, and judging from a list of DPP and REIT “product partners” shown on VFG’s website, it is reasonably anticipated that Mr. Vanclef and VFG Securities can also expect lawsuits or arbitration claims from these same customers.
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