Lombard Stockbroker Sentenced To Jail For Fraud
Steven Pagartanis (also known as Steve Pagartanis) of Setauket New York a stockbroker registered with Lombard Securities Incorporated has been sentenced by a United States District Judge to 170 months behind bars as a result of the stockbroker pleading guilty to conspiring to commit wire and mail fraud as part of carrying out a securities fraud and a Ponzi scheme. E.D.N.Y. Docket No. 18-CR-374 (JMA) (Jan. 9, 2020).
According to the United States Attorney’s Office for the Eastern District of New York, between January of 2000 and March of 2018, individuals who mostly consisted of elderly women had been advised by Pagartanis to invest in companies which would purportedly pay eight percent annual returns. The investors were instructed by Pagartanis to make their checks payable to a company that he operated unbeknownst to them. The individuals’ funds were laundered by Pagartanis and then applied towards luxurious items, personal expenses and the financing of a pet store owned by Pagartanis’ wife. Pagartanis would also use the individuals’ funds to pay purported dividends or interest payments to other individuals who fell victim to the scheme. Those who invested through Pagartanis in this manner sustained $9,000,000.00 in losses.
In a parallel matter, Pagartanis has been charged by Securities and Exchange Commission (SEC) with defrauding his brokerage customers. SEC v. Steven Pagartanis Civil Action No. 2:18-cv-3150 (May 30, 2018). SEC’s Complaint alleged that in order to conceal the scheme, Pagartanis created fake account statements to reflect customers’ ownership interests in land development companies. SEC alleged that Pagartanis’ conduct was violative of Securities Exchange Act of 1934 Section 10(b) and SEC Rule 10b-5.
Pagartanis has been suspended by Financial Industry Regulatory Authority (FINRA) from associating with any FINRA member in any capacity based upon allegations that the stockbroker failed to comply with a customer initiated investment related arbitration award or otherwise confirm his compliance with the regulator. FINRA Case No. 18-01353 (Sept. 13, 2019).
FINRA Public Disclosure indicates that Pagartanis is the subject of twelve customer initiated investment related disputes pertaining to allegations of his bad business practices while employed by securities broker dealers including Lombard Securities Incorporated and Cadaret Grant. On December 21, 2018, a customer initiated investment related complaint in reference to Pagartanis’ conduct was resolved for $150,000.00 in damages based upon accusations that real estate securities transactions were unsuitable and had been effected outside the auspices of Cadaret Grant during the period in which Pagartanis was associated with the securities broker dealer.
Pagartanis is also referenced in a customer initiated investment related complaint which was settled on May 14, 2019 for $35,000.00 in damages based upon allegations of the customer being advised by the stockbroker to invest in unapproved outside investments including Genesis Land Development Corporation when Pagartanis was associated with Cadaret Grant.
On June 26, 2019, a customer initiated investment related arbitration claim concerning Pagartanis’ activities resulted in the customer being awarded $1,462,000.00 in compensatory damages founded on Pagartanis being found liable for causing the customer’s losses. FINRA Arbitration No. 18-01353. The Statement of Claim indicated that a fiduciary duty which was owed to the customer by Pagartanis had been violated and that the stockbroker’s transactions failed to be adequately supervised by Cadaret Grant. The claim also alleges misrepresentations and omissions by Pagartanis relating to purported Genesis Land Development Corporation investments.
On February 13, 2020, another customer initiated investment related arbitration claim pertaining to Pagartanis’ conduct was settled for $87,500.00 in damages supported by allegations of the customer’s funds being misused by Pagartanis for a purported unregistered investment that did not exist during the time that Pagartanis was employed by Lombard Securities Incorporated and Cadaret Grant. FINRA Arbitration No. 18-03070.
Public Disclosure indicates that Pagartanis was discharged by Cadaret Grant on March 20, 2017 supported by allegations that he has been referenced in one or more customer initiated investment related disputes pertaining to allegations of his fraudulent and unapproved private securities transactions. The stockbroker failed to comply with the securities broker dealer’s investigation concerning his possible violations of its rules or policies.
Pagartanis was discharged by Lombard Securities Incorporated on March 13, 2018 based upon accusations that he failed to comply with the securities broker dealer’s investigation into a customer complaint in which he was accused of converting the customer’s funds through an unapproved securities transaction.