Category Archives: Provident Royalties

Bambi Holzer has a tainted track record filled with investor complaints. Now, Holzer is facing new complaints over risky private placements in Provident Royalties. The story was first reported March 29 by Investment News.

Last summer, the Securities and Exchange Commission (SEC) charged Provident with securities fraud involving $485 million in private securities sales. In March 2010, the Financial Industry Regulatory Authority (FINRA) expelled Provident Asset Management LLC, the broker-dealer arm of Provident.

According to the SEC’s complaint, Provident marketed a series of fraudulent private placements through Provident Royalties in an alleged Ponzi scheme.

An April 12, 2009, article by Forbes initially brought to light the fact that Holzer’s “advice” to clients while employed at UBS had resulted in $12 million in settlements.

After resigning from UBS in 2001, Holzer went to A.G. Edwards, which fired her two years later for “business practices inconsistent with the firm’s policies,” according to the Forbes article.

Holzer’s next job was with Brookstreet Securities, where she worked between 2003 and 2007. While at Brookstreet, Holzer was fined $100,000 and suspended for 21 days for “negligent misrepresentations to customers regarding certain product features in connection with the purchase and sale of variable annuities.”

In total, Holzer has worked with seven investment firms since 1983, according to FINRA’s BrokerCheck.

Holzer currently is a registered representative affiliated with two firms: Wedbush Morgan Securities and Sequoia Equities Securities Corp.

Provident Asset Management has officially been expelled by the Financial Industry Regulatory Authority (FINRA) for marketing a series of fraudulent private placements through its affiliate, Provident Royalties, LLC, in what the regulator calls a “massive Ponzi scheme.”

According to FINRA, Provident misrepresented to investors that the funds raised through the various offerings would be used to purchase interests in the oil and gas business. In reality, the funds were commingled and used by an affiliated issuer to make dividend and principal payments to other investors. In addition, FINRA says Provident acted as the agent in an oil and gas private placement offering but failed to establish an escrow account for investors’ funds during the contingency period of the offering.

FINRA found that from September 2006 through January 2009, Provident Asset Management marketed and sold preferred stock and limited partnership interests in a series of 23 private placements offered by Provident Royalties, LLC. Provident Asset Management’s only business line was acting as the wholesaling broker-dealer for the Provident Royalties’ offerings, which were sold to customers through more than 50 retail broker/dealers nationwide. In total,  more than $480 million was raised through approximately 7,700 individual investments made by thousands of investors.

Meanwhile, FINRA’s broader investigation into broker/dealers that sold Provident private placements remains ongoing.

The Financial Industry Regulatory Authority (FINRA) has closed the doors on GunnAllen Financial. FINRA apparently informed the financially troubled broker/dealer late last week that if it fell below mandatory net capital requirements it would be forced to close its operations.

GunnAllen’s financial issues stem to the increasing number of lawsuits being filed by investors against the firm. As reported March 22 by Investment News, investors are seeking as much as $50 million in damages, with many of the claims tied to former GunnAllen broker Frank Bluestein.

The Securities and Exchange Commission (SEC) filed fraud charges against Bluestein in September 2009 on allegations that he lured elderly investors into refinancing their home mortgages so he could fund investments in a $250 million Ponzi scheme operated by Edward May and his company, E-M Management Company LLC (E-M).

GunnAllen also is facing a slew of lawsuits by investors over sales of private placements in Provident Royalties LLC.

Provident Royalties Joseph S. Blimline faces a temporary restraining order and emergency asset freeze by the Securities and Exchange Commission (SEC) for his alleged role in a $485 million fraud and Ponzi scheme involving oil and gas placements. The SEC obtained the order on Dec. 3.

Previously, on July 7, the SEC had filed a complaint against three other co-owners of Provident Royalties: Paul R. Melbye, Brendan W. Coughlin and Henry D. Harrison. In that complaint, the SEC obtained a temporary restraining order and asset freeze, as well as appointed a receiver of the defendants’ assets.

The SEC alleges in its amended complaint that Provident advanced approximately $93 million of investor funds to Blimline and various entities he controlled. The funds were for the purported purchase of oil and gas interests, or loans, to which Provident often never received title or repayment.

In addition, the amended complaint alleges that in presentations to investors and representatives of broker/dealers that marketed Provident securities, Blimline failed to disclose his receipt of such funds, his involvement in the management of Provident and a prior sanction imposed against him by securities authorities in Michigan for prior conduct.

If you’ve experienced substantial investment losses in Provident Royalties, please contact us. We want to hear your story and advise you on your legal options.

Securities America and financial adviser Bradley Hofhines have been sued in a potential class action tied to Provident Royalties and oil-and-gas private placements that the Securities and Exchange Commission (SEC) alleged in July were fraudulent. Securities America has been named in at least two other related potential class actions; however, this may be the first time an adviser and his individual practice are cited.

As reported Dec. 1 by Investment News, a lawsuit filed Nov. 25 in an Idaho federal court alleges that Bradley K. Hofhines and his firm, Summit Retirement Advisors LLC, failed to disclose to clients that returns from investments in Provident Royalties LLC securities did not come from revenue generated by actual investments in oil-and-gas properties.

“Rather, investor funds were commingled, and funds raised from later offerings were used to pay so called dividends or “returns of capital” to earlier Provident investors,” the article says.

Hofhines is affiliated with Securities America, an independent broker/dealer subsidiary of Ameriprise Financial. Securities America and Ameriprise are named in the latest lawsuit.

The complaint alleges that the defendants violated federal securities laws and the Idaho Uniform Securities Act, as well as provided investors with materially untrue and misleading offering materials regarding Provident Securities.

In July, the SEC charged Dallas-based Provident of allegedly committing fraud in connection to the sale of $485 million of preferred stock and limited partnership offerings in oil and gas deals. Since then, many investors have begun legal action to get their money back by filing individual arbitration claims with the Financial Industry Regulatory Authority (FINRA).

If you have suffered investment losses and wish to discuss filing an individual arbitration claim with FINRA or have questions about these investments, please contact us.

Bernie Madoff and his $65 billion scam have singlehandedly made Ponzi schemes a near-daily front-page news story. Now it’s Provident Royalties LLC making news. Provident, along with its three founders – Paul Melbye, Brendan Coughlin and Henry Harrison – was charged by the Securities and Exchange Commission (SEC) in July for allegedly bilking thousands of oil and natural gas investors in a $485 million Ponzi scheme. Broker-dealer Provident Asset Management LLC and the 21 entities that offered and sold the securities to investors also were named in the lawsuit.

According to the complaint, Dallas-based Provident raised nearly half a billion dollars from more than 7,000 investors by promising high returns and misrepresenting how the funds would actually be used. The alleged fraud reportedly went undetected by regulators for three years – from September 2006 until January 2009. In typical Ponzi-like fashion, a portion of investors’ funds is said to have been used to pay earlier Provident investors.

“Investors were told that 86% of their funds would be placed in oil and gas investments. That representation was false,” the SEC’s complaint said.

For more information about the SEC’s action against Provident, you can read Litigation Release No. 21118. Dennis L. Roossien, Jr., has been named as the court-appointed receiver in the case. For the latest information about the receivership, visit the Receiver’s Web site.