Securities Fraud Blog | Find out if your broker is liable for your losses

TAG | SBM Investment Certificates

Sep/10

30

SBM, Geneva, & 1st Atlantic

SBM Certificate Company is one of several companies involved in a Securities and Exchange Commission lawsuit filed in 2006. The SEC suit alleges that SBM Certificate Company, SBM Investment Certificates, 1st Atlantic Guaranty Corp., and Geneva Capital Partners, LLC, all owned or controlled by Eric M. Westbury of Silver Spring, Md., did not maintain the minimum reserves in cash or qualified investments to cover the $33 million in face-amount certificates held by over 2,000 investors. 

If your broker or financial advisor recommended this certificate Soreide Law Group, PLLC,  can pursue a claim against your broker or financial advisor.

A federal judge in New York froze the accounts in 2007. So as the certificates, similar to bank certificates of deposit, come due, the investors have been unable to cash in their certificates.

On April 4, 2006, the SEC filed an emergency civil action in federal court in Greenbelt, Maryland, to stop Eric M. Westbury of Silver Spring, Maryland, and three companies that Westbury owns or controls, from continuing to engage in alleged federal securities law violations against investors. The SEC’s complaint alleged that Westbury was at the center of two on-going, related frauds; the first involved a fraud on investors in SBM Certificate Company (“SBM”) and SBM Investment Certificates, Inc. formerly known as 1st Atlantic Guaranty Corp. (“1st Atlantic”); and the second involved a fraud on the District of Columbia Department of Banking and Financial Institutions/Credit Enhancement Fund, an investor in and client of Geneva Capital Partners, LLC (“Geneva”). Westbury was the Chairman of the Board, Chief Executive Officer and President of SBM and of 1st Atlantic, and 100% owner of Geneva. The complaint alleged that SBM and 1st Atlantic issued “face amount certificates” totaling approximately $33 million, to over 2,000 investors, most of whom were individuals whose certificates represented investments of less than $10,000. The complaint also alleged that since approximately January 2003, 1st Atlantic and SBM have failed to maintain the statutorily required minimum reserves in cash or qualified investments on their outstanding face-amount certificates. The complaint alleged that certain of the assets that SBM has represented as its reserves are fictional. As a result, if investors attempted to redeem their investments in the normal course, neither SBM nor 1st Atlantic would have adequate reserves to pay back all of their invested capital. The Commission’s complaint further alleged a separate but related ongoing fraud at Geneva. Based on material misrepresentations and omissions, and without being apprised of serious conflicts of interest, the District invested with Westbury and Geneva over $21 million of District of Columbia and federal funds earmarked for the D.C. charter school Credit Enhancement Fund. The Credit Enhancement Fund program provides loans and guaranties to charter schools to improve their creditworthiness so that commercial financial institutions will be more willing to make loans to, and/or participate in bond issues for, the particular charter school’s capital improvements. Rather than invest the funds in accordance with the terms of the offering documentation, the Commission’s complaint alleged that Westbury and Geneva “invested” almost all of the money in Westbury-related and controlled companies. In an effort to conceal their alledged fraud, Westbury and Geneva have continued to make material misrepresentations and omissions, in account statements and other documentation, provided to the District. While the District has received $10 million of the funds it initially invested back from Geneva, and used those funds to extend loans to District charter schools, the Commission’s complaint alleged that the District has demanded the balance of its investment from Geneva and Westbury but Geneva and Westbury have been unable to comply with that request. The Commission’s complaint charged defendants 1st Atlantic and SBM with violations of the Investment Company Act of 1940.

Many of these investments were sold by stock brokers and financial advisors around the country. This allows us to pursue a claim on your behalf before the Financial Industry Regulatory Authority nationwide. Call now for a free consultation.

If you feel you are a victim of these alleged fraudulent schemes, call a Securities arbitration lawyer for a free consultation on how to recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA  and the Financial Industry Regulatory Authority.

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