Jeremy McGilvrey, a former broker with Next Financial Group and LPL Financial and one-time CEO of the now-defunct Hill Country Wealth investment firm, had a reputation for extravagance: A black Bentley convertible, exotic vacations and celebrity parties. Today, McGilvrey is trading his fancy suits for a different kind of fashion wear: a prison uniform.

On Dec. 1, 2009, Bexar County state District Judge Maria Teresa sentenced the former high-flying investment adviser to 20 years in prison for swindling clients out of millions of dollars. McGilvrey also was ordered to pay a $10,000 fine and nearly $2 million in restitution to his victims. The amount could increase if authorities identify additional clients taken in by the Texas broker.

In October, McGilvrey, 32, pleaded guilty to felony theft and misapplication of fiduciary property of clients, most of whom were elderly. Two victims, Thomas and Dorothy Crouch, were taken for an estimated $1.6 million. Their son, Houston attorney James Crouch, has since filed a lawsuit against McGilvrey.

The 94-year-old Crouch, who once served as deputy surgeon general of the U.S. Air Force, died Nov. 30, 2009. He suffered from Alzheimer’s.

McGilvrey was fired from Next Financial in May 2009 for “borrowing money from a client,” according to records with the Financial Industry Regulatory Authority (FINRA).

Before joining Next Financial, McGilvrey was affiliated with LPL Financial of Boston. FINRA records state that he was “permitted to resign” from LPL last year after failing to properly supervise a registered representative and for not reporting a business transaction.

Next Financial also is one of a number of independent broker/dealers with advisers connected to sales of private securities of an oil and gas partnership, Provident Asset Management LLC. In July, the Securities and Exchange Commission (SEC) charged Provident of committing a $485 million fraud.

Our lawyers are actively pursuing Jeremy McGilvrey and Next Financial Group. Please tell us about your investment losses by leaving a message in the comment box, or the Contact Us page. We will counsel you on your options.

Arbitration claims involving Medical Capital Holdings are expected to escalate in the coming months, as investors take certain broker/dealers to task over allegations of misrepresentation and omission of material facts in connection to sales of Medical Capital Notes.

On Sept. 18, 2009, a class action lawsuit - Case No. 09-CV-1084 - was filed in the United States District Court for the Central District of California on behalf of investors who purchased securities issued by Medical Provider Financial Corp. III, Medical Provider Financial Corp. IV, Medical Provider Funding Corp. V and/or Medical Provider Funding Corp. VI. In the lawsuit, broker/dealer Cullum & Burks Securities, as well as other broker/dealers, is named as a defendant. Among the allegations cited in the complaint are violations of Sections 12(a)(1) and 12(a)(2) of the Securities Act of 1933.

Specifically, the defendants are accused of failing to exert due diligence and properly investigate certain securities issued by Medical Capital. In July, the Securities and Exchange Commission (SEC) filed fraud charges against Medical Capital Holdings and related Medical Capital entities. In the SEC’s complaint, Medical Capital is accused of defrauding investors by misappropriating about $18.5 million of investor funds and by misrepresenting to investors that no prior offerings had defaulted on or been late in making payments to investors of principal and/or interest.

According to the SEC, Medical Capital raised more than $2.2 billion through offerings of notes in Medical Provider Funding Corp. VI and earlier offerings made by five other wholly owned special-purpose corporations (SPCs) named Medical Provider Funding Corp. I, II, III, IV and V. Today, all five SPCs are in default to investors after failing to make interest and principal payments.

The brokerage firms that marketed and sold Medical Capital Notes are alleged to have made untrue statements about the investments, including their risks. In addition, many of the broker/dealers failed to make “reasonable and diligent” inquiries regarding information about Medical Capital and its offerings. As it turns out, the information was seriously flawed. And investors are now paying dearly for this breach of fiduciary duty.

If you have suffered losses in Medical Capital Notes and wish to discuss filing an individual arbitration claim with the Financial Industry Regulatory Authority (FINRA) or have questions about your Medical Capital investments, please contact us by leaving a message in the Comment Box below or on the Contact Us form.

Independent broker/dealers and their financial advisers who sold investors private securities tied to Provident Asset Management LLC and Medical Capital Holdings - each of which faces securities fraud charges by the Securities and Exchange Commission (SEC) - could soon find themselves in the hot seat, as well, in the form of investor lawsuits and arbitration claims. Among the firms that reportedly sold either one or both of the investments in Provident and Medical Capital: Securities America, GunnAllen Financial American Portfolios Financial Services, Capwest Securities, J.P. Turner & Co. LLC, National Securities Corp. and Next Financial Group.

As reported July 26, 2009, by Investment News, private placement deals are a lucrative business, garnering brokers big commissions of anywhere from 7% to 10%. The firms themselves typically also receive a fee when their representatives sell the offerings.

Broker/dealers that offer their representatives extremely high payouts, in the range of 95%, are more likely to allow brokers to sell the deals because of the lucrative fees that the firm could gain, the article said.

On July 16, the SEC charged Medical Capital Holdings of Tustin, California, with securities fraud in the sale of $77 million of private securities in the form of notes.

On July 7, the SEC charged Provident Asset Management LLC of Dallas, Texas, of operating a fraud and a Ponzi scheme involving sales of $485 million of preferred stock and limited partnership offerings in oil and gas deals.

The Financial Industry Regulatory Authority (FINRA) already has increased its scrutiny of broker/dealers for sales of Medical Capital Holdings offerings to investors, requesting information from firms that sold the investments to clients on July 16 - the same day the SEC charged Medical Capital with securities fraud.

If you are a client of Securities America, GunnAllen Financial, Next Financial Group, American Portfolios Financial Services, Capwest Securities, J.P. Turner & Co. LLC or National Securities Corp. and were sold limited partnership interests and/or preferred stock in Provident Asset Management LLC or Medical Capital Holdings, we want to hear your story. Tell us about your situation by leaving a message in the Comment Box below or via the Contact Us form.

Next Financial Group is finding the year of 2009 to be an ongoing hotbed of controversy, with the independent broker/dealer mired in investor complaints and regulatory problems. In July, the Houston-based firm was fined $1 million by the Financial Industry Regulatory Authority (FINRA) for supervisory failures that led to churning of customers’ accounts and excessive commissions. In August, a former Next Financial broker, Jeremy McGilvrey, became the target of an investigation and eventual lawsuit for allegedly stealing $1.5 million from two elderly clients, one of whom suffers from severe Alzheimer’s and dementia. The complaint was amended in September to include Next Financial, which the claimant says failed to supervise McGilvrey during the time that the crimes reportedly were committed.

Next Financial also was one of a number of independent broker-dealers with advisers selling private securities of an oil and gas partnership - Provident Asset Management LLC of Dallas - that the Securities and Exchange Commission (SEC) brought charges against last month for allegedly committing a $485 million Ponzi scheme.

Allegations of supervisory failures in connection to rogue brokers are not exactly new to Next Financial. According to FINRA records, similar troubles date back several years. In 2008, a Next Financial broker who had been ousted from the securities industry cost Next Financial $165,000 to settle claims involving clients who got burned by the broker. The broker in question was Gregory Horton, who joined Next Financial in 2004.

FINRA later imposed fines on Next Financial, citing the firm’s lack of reasonable policies and written procedures resulted in its failure to detect churning of customer accounts by Horton and another Next Financial broker, Timothy Shively, as well as excessive markups and markdowns on corporate bond trades by another two brokers. As a result, customers of Next Financial, including elderly and retired individuals, lost about $768,000.

In separate actions, FINRA barred Horton and Shively from the securities industry in January 2008 and October 2008, respectively.

FINRA further found that Next Financial’s systems and procedures governing variable annuity exchanges were not reasonable and failed to provide adequate guidance about the criteria that should be used when recommending variable annuity exchanges to clients.

To learn whether you can recover losses through a claim against Next Financial Group, please fill out the Contact Us form or leave a comment below. We want to hear your story and consult with you about your options.

The brokerage firms of Next Financial and LPL Financial have both been added as defendants in a Bexar County, Texas, lawsuit that claims an elderly San Antonio couple -Thomas H. Crouch, 93, and his wife, Dorothy, 89 - lost nearly $2 million because of a fraud scheme masterminded by financial adviser Jeremy McGilvrey. McGilvrey is the once-flamboyant owner of the now-defunct Hill Country Wealth and a registered agent for LPL and Next Financial.

According to an Aug. 14 article by the San Antonio News, the complaint in the Crouch case accuses McGilvrey, Hill Country Wealth President Lance Smith and others of “plundering” the elderly couple’s wealth by inducing them to make risky investments, buy stock in Hill Country Wealth and even lend the firm money. The lawsuit was filed by James Crouch, who serves as guardian for his father and stepmother. The elderly Crouch apparently suffers from Alzheimer’s disease and dementia, while his wife is being treated for depression and memory loss.

“McGilvrey and Smith embarked on a scheme to take as much money from their clients as possible, including the sale of the client’s solid, safe investments, in order to have cash in the accounts of Hill Country Wealth, and in the pockets of McGilvrey and Smith,” the lawsuit said.

Among the charges listed in the complaint: Fraud, sale of unregistered securities and civil conspiracy.

According to information posted on the Financial Industry Regulatory Authority’s Web site, McGilvrey’s employment history says he worked for LPL until June of 2008 when he was “permitted to resign” for “failure to properly supervise (a) registered representative with respect to reporting of (a) direct business transaction.”

His “next” stop, albeit short lived, was Next Financial. In May, he was fired for violating company policy by borrowing from a client. Reportedly those clients are the Crouches.

McGilvrey’s professional intrigue doesn’t end there. An Aug. 2 article in the San Antonio News says McGilvrey reportedly told prospective clients that he had received the “Top 100 Financial Advisors Award” from Money Magazine for four consecutive years. McGilvrey further cited articles about his investing prowess in the Wall Street Journal and Fortune Magazine. In reality, however, the award McGilvrey connected to Money Magazine hasn’t existed for 20 years. And the newspaper citations could not be found.

As for Next Financial, it is no stranger to lawsuits based on charges of failure to supervise its agents. In 2008, FINRA records show that Next Financial paid a $1 million fine because it “failed to create a reasonable system and written procedures for supervising branch offices, regional managers and registered representatives.”

The same FINRA report also states that a manager with Next Financial “churned customer accounts whereby customers lost $565,000 because no one at the firm was reviewing his transactions.”

Next Financial also is one of several independent broker-dealers with advisers selling private securities of an oil and gas partnership - Provident Asset Management LLC - that the Securities and Exchange Commission (SEC) charged last month of committing a $485 million Ponzi scheme.

In addition to the civil litigation, the Texas State Securities Board and San Antonio police are investigating possible criminal offenses by McGilvrey and others.

Meanwhile, McGilvrey - who once cultivated an image of wealth with his black Bentley convertible and trips to Las Vegas and Australia on a private jet - is missing in action. He has not been seen or heard from in months.