FINRA Bars JP Turner Stockbroker In $12 Million Ponzi Scheme
Tony A. Kassaei of Irvine California a stockbroker formerly registered with JP Turner Company has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon findings that Kassaei took part in private securities transactions involving real estate securities during the time that he was employed by JP Turner. Letter of Acceptance Waiver and Consent No. 2018058547502 (Sept. 22, 2020).
According to the AWC, when Kassaei was associated with JP Turner, he took part in no less than eleven customers’ private transactions which totaled $2,600,000.00 in value. The AWC stated that the customers purchased promissory notes that had been issued by companies controlled by Francisco Esparza – a colleague of Kassaei’s at JP Turner.
Kassaei did not seek or obtain authorization from the securities broker dealer in regard to his participation in these transactions. FINRA indicated that the transactions were also not placed on the records and books of JP Turner.
The AWC stated that in September of 2017, Esparza pleaded guilty to wire fraud in which he admitted to having defrauded investors from 2009 to 2016 by carrying out a Ponzi scheme. Investors sustained about $12,000,000.00 in losses because of this Ponzi scheme. This included $1,300,000.00 in losses by those eleven customers who purchased promissory notes at Kassaei’s direction. FINRA noted that an elderly investor saw half of their life savings vanish because of Kassaei’s actions. Esparza was sentenced to six years behind bars in July of 2018.
FINRA determined that Kassaei’s participation in the customers’ securities transactions was obvious because of his solicitation of those investments and his assistance to customers who decided to move forward with promissory notes purchases. The AWC stated that Kassaei helped customers establish self-directed individual retirement accounts as part of the process. The stockbroker also arranged for Francisco Esparza to get promissory notes in order for investors. Kassaei procured customers’ signatures on documents relating to their purchases. He was paid $125,000.00 by Francisco Esparza for his efforts.
Kassaei did not make his role or other details in the transactions known to JP Turner even though he was required to do so. In response to the securities broker dealer’s specific question regarding Kassaei’s participation in private securities transactions totaling $500,000.00, the stockbroker made it seem like they never happened. Kassaei’s unapproved private securities transactions constituted his violation of FINRA Rules 2010 and National Association of Securities Dealers (NASD) Rule 3040.
FINRA also stated that Kassaei did not respond to its requests that had been made as part of its investigation into his activities. Kassaei was asked on July 8, 2020 to provide information to the regulator as it related to his alleged participation in these private securities transactions and possibly the Ponzi scheme carried out by Francisco Esparza. Kassaei met with FINRA staff who asked him questions about the transactions. The stockbroker upped and left without answering all of FINRA’s questions. FINRA also stated that Kassaei cut off its access to his emails during its investigation. The stockbroker also failed to respond to FINRA’s requests for his information and documents. Kassaei violated FINRA Rules 2010 and 8210 in this respect.
FINRA Public Disclosure reveals that Kassaei is referenced in a customer initiated investment related written complaint that was settled for $84,000.00 in damages based upon accusations that a fiduciary duty had been breached by the stockbroker and that the customer was defrauded. According to the complaint, Kassaei was negligent and had misrepresented information relating to the customer’s trust deeds and annuities. The complaint also alleges that unsuitable investment recommendations were made to the customer during the period that Kassaei was employed by JP Turner.