Hans P. Black and his investment advisory firm, Interinvest, are targets of an SEC complaint alleging a $17 million fraud.
According to the SEC, Mr. Black’s firm looked good on paper. He promised clients a “conservative, risk averse approach” focused on capital preservation. That’s financial advisor jargon for, “we might not have higher returns than other advisors, but at least we won’t LOSE your money.”
Instead, Mr. Black used his clients’ funds to earn secret profits for himself. Unbeknownst to his clients, Mr. Black served in leadership positions in four Canadian penny stock companies, Tyhee Gold Corp., Williams Creek Gold Ltd., Amorfix Life Sciences, Ltd., and Wi2Wi Corp.
Penny stock companies are incredibly risky. They are baby companies, just starting out, and are not listed on a stock exchange. These four companies were no different. They were just starting, were not profitable, and consistently lost money.
Not only was Mr. Black secretly in leadership positions of these four companies, but he also had undisclosed company called Zurmount Research, Inc. Zurmount supposedly provided consulting services.
Here’s how the scam worked in three simple steps:
Wow! On top of his ordinary fees, Mr. Black pocketed over $1 million through this undisclosed kickback scheme. While Mr. Black got richer, his clients have lost $12 million, and their losses could go up even higher.
If your financial advisor recommended an exotic investment that lost money, they may have an ulterior motive. An experienced investment fraud lawyer may be able to help you investigate. If your financial advisor had an undisclosed conflict of interest, the lawyers of Investor Defense Law LLP may even be able to recover your losses.
Investor Defense Law LLP is a law firm dedicated to helping investors in California, Georgia, and Washington recover losses caused by stockbrokers, financial advisors, or investment firms. To learn more, contact an investment fraud attorney at 800.487.4660.