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With the advent of new technology being employed at almost all broker dealers, the potential for a financial advisor to engage in excessive or unauthorized trading or “churning” has been substantially reduced. Churning is simply excessive trading in a brokerage account in order for the broker or financial management team managing the investment account to generate greater commissions.

In brokerage customer accounts, or trading accounts in which the broker is paid only when trades are generated, churning or excessive fees has always been a concern. If a broker is only compensated when selling or purchasing securities, the potential for the broker to engage in fraud is compelling. The logic of a brokerage account, as opposed to a fee based account, is that the model is suitable for investors who have a set asset allocation with very little trading activity. As opposed to a monthly or yearly fee for managing assets, known as a fee-based account or wrap account, customers who have set investments in stocks or bonds will save money because there is very little trading activity.

Now with the advent of a very basic trading systems algorithm, broker dealers should be able to immediately register when churning occurs by cross checking the total customer’s assets under management against the trading activity in the account. If the trading activity in comparison to a customer’s assets reaches a certain threshold, known as the turnover ratio, the broker dealer should have alerts in place to identify the client, the broker or financial advisor, and inform the broker’s branch manager. The branch manager should then conduct a review of the trading activity as well as the client’s investment profile. If the trading abuse is occurring in an investment account belonging to a senior citizen, new FINRA Rule 4512 has mandated brokerage firms to create a trusted contact person. This trusted contact person should be notified in order to respond to any possible stockbroker fraud being committed in the investment account. FINRA Rule 2165 permits brokerage firms that have a reasonable basis to believe that stock broker fraud has occurred, to place a temporary hold on the “disbursement of funds.” These rules and cross checks should make it very difficult to engage in churning. But still, it occurs more frequently than most other forms of stock broker fraud.

The Securities Exchange Commission on Tuesday filed charges against companies and “individuals” for selling Woodbridge Securities. As discussed in our previous post, in December 2017, Woodbridge filed for bankruptcy and, immediately thereafter, received an SEC complaint listing the company as a massive Ponzi scheme. Woodbridge sold securities billed as “First Position Commercial Mortgage Loans” or (“FPCM’s”). The Woodbridge FPCM Fund functioned as a private loan owned and held by Woodbridge. Investors owned a first position lien on a pool of mortgage loans. The way the security was touted to investors was that the product offered excellent safety. In the event that any one of the mortgages defaulted, investors were informed that they would simply pick up the collateral or underlying property that went into default. This safety, coupled with a short-term interest rate above 6%, made the product incredibly appealing to returned investors looking for safety and income. Investors were promised monthly payments and a return of their principal invested in a 12-24 month span. Woodbridge marketing material provided to brokers to present to clients provided “Property Examples” such as a water bottling plant in New York or a single family home in California. Roughly 8,400 individual investors purchased Woodbridge securities.

In reality, Woodbridge was operating a massive Ponzi scheme with funds from new investors going to pay the promised high interest rates from earlier Woodbridge purchasers. As stated by the SEC, the funds were risky, illiquid private offerings.

Investor funds also went to funding the lavish lifestyle of Woodbridge CEO Robert Shapiro. Woodbridge also spent massive sums on commissions to brokers looking to unload their products. Brokers selling Woodbridge were offered compelling commissions on the FPCM and Promissory Notes sold to investors.

Assault charges are a serious matter that often are the result of the most trivial encounters. A friendly debate at a local bar between a New York Rangers and New Jersey Devils fan gone awry or a shouting match at a wedding afterparty that went too far. You may have been the victim, the target of an obnoxious individual, and had no choice but to use force to defend yourself. All of these scenarios can lead to assault charges under the New Jersey Criminal Code.

If charged with N.J.S.A. 2C:12-1A Simple Assault, the penalties under the New Jersey Criminal Code can be severe. Along with fines of up to $1,000 and jail time of up to 6 months, the most serious consequence under N.J.S.A. 2C:12-1A is a guilty plea that will result in a criminal record. Having a Simple Assault charge on your criminal record has a very negative effect on future employment and educational opportunities and will affect you for the rest of your life.

The statute which defines Simple Assault provides that: A person commits a Simple Assault if he attempts to cause or purposely, knowingly or recklessly causes bodily injury to another. Bodily injury is defined as physical pain, illness or any impairment of the physical condition.

If you or someone you know has been locked up and charged with a criminal offense under the New Jersey Criminal Code, we can assist them at their bail hearing, help them get removed from jail, and prepare them for their court appearances.  

There have been massive reforms in New Jersey to rules governing bail and pretrial release. If you have been charged with a criminal offense in New Jersey, the determination of bail is a critical step in your case.

In New Jersey, prior to January 1, 2017, the bail process was usually set at a dollar amount coinciding with the severity of the crime or denied by a judge. The amended New Jersey bail reform bill “the New Jersey Bail Reform and Speed Trial Act” has replaced the dollar amount or monetary release system (asking for the defendant to post a set amount of money) and replaced with a non-monetary risk assessment.

New Jersey Police departments claim they can see and smell everything. Using skills usually reserved for a Marvel superhero, law enforcement routinely claims they can see drugs through a closed container, smell marijuana through a brick house miles away, or detect the odor of marijuana from a vaporizer pen used solely for cigarettes.

 If you have been the victim of a superman cop stop, whereby plain smell or plain view was the basis for the search and subsequent seizure of contraband on your person, seasoned criminal defense attorneys can help.

 One of the most used exceptions to the warrant requirement is the plain view exception. In New Jersey, the plain view exception to warrant requirement rule can be applied to four different sensory perceptions including view, smell, sound, and touch. The plain view doctrine is used in cases involving guns and drugs routinely, but there are requirements that need to be fulfilled for the exception to be deemed reasonable.

Last Friday, February 10, for the first time under President Trump, an individual covered by the Deferred Action for Childhood Arrivals program (“DACA”) was taken into custody. Daniel Ramirez Medina, a 23-year-old with no criminal record who was brought to the United States from Mexico when he was seven years old, filed a challenge to his detention in Seattle the Monday following his arrest, arguing that the government violated his constitutional rights because he had work authorization under the DACA program.

Immigration Customs Enforcement (“ICE”)  spokeswoman Rose Richeson issued an official ICE statement claiming that Daniel Ramirez was a “self-admitted gang member,” alleging that “ICE officers took Mr. Ramirez into custody based on his admitted gang affiliation and risk to public safety.”

In response, Mark Rosenbaum, one of Daniel Ramirez’s attorneys, strongly refuted the allegation, saying in a statement: “Mr. Ramirez unequivocally denies being in a gang. While in custody, he was repeatedly pressured by ICE agents to falsely admit affiliation.”

Shoplifting under N.J.S.A. 2C:20-11 of the New Jersey Criminal code is one of the most common crimes committed in the state of New Jersey, and can often times be accused over mistake of fact or misunderstanding between vendor and customer. Specifically, there have been a large number of cases in recent years stemming from the popular women’s cosmetics store Sephora. The high number of cases stemming from this vendor revolve around its policies concerning free samples, which are not followed strictly by their sales employees, but can be enforced stingily by their anti-theft team.

Title 2c of the New Jersey Criminal code outlines shoplifting in its entirety as one of six offenses; however, we will be looking at the statute as it deals with purpose or intent. Specifically did you mean to take something and not pay for it? What that your intent? N.J.S.A 2C:20-11b(2), outlines the types of cases accused shoplifters generally encounter at Sephora. This section of the statute outlines that it is considered shoplifting,

“(2) For any person purposely to conceal upon his person or otherwise any merchandise offered for sale by any store or other retail mercantile establishment with the intention of depriving the merchant of the processes, use or benefit of such merchandise or converting the same to the use of such person without paying to the merchant the value thereof.”

Constitutionally protected privacy interests are enshrined in the 4th Amendment protection against warrantless searches and seizures as well as Article I, Paragraph 7 of the New Jersey State Constitution. One key exception to the warrant requirement, as well as the requirement for probable cause precedent to the execution of a search, is voluntary consent knowingly waived by a party with authority to search. For a person to be considered a valid third party that can consent to a search of property he or she must meet a few requirements:

·         The area being searched is shared with the suspect and the third party.

·         The third party has control over the shared area- i.e., they have a key to such areas or their name is listed on the lease.

The Fourth Amendment of the constitution protects people from unreasonable search and seizures, but the law is not as clear-cut in some particular circumstances.  One grey area in search and seizure law involves searches conducted at student housing owned by colleges.  College campuses are unique in that they create their own set of laws and policies that their students need to abide by while attending the school. Universities generally have very strict policies, including rules that could be seen as infringing on the students 4th Amendment rights.  Is it reasonable for universities to be able to conduct warrantless search and seizures on campus living facilities? The 4th Amendment protects people from unreasonable search and seizures, but is it considered reasonable for universities to be able to conduct random searches of students living on campus? There are two primary means by which universities may bypass a students Fourth Amendment right:

1.      Courts deem attending a university and residing in a school owned building as a voluntary waiver to follow the university polices and laws. Student routinely sign contracts consenting to random searches by school officials when living in a school owned facility.

2.      The University’s inherent duty to keep the student’s facilities safe with inspections, i.e. checking fire alarms systems give schools a regulatory exemption to conduct warrantless searches.

Although shoplifting is widely thought of as a petty offense and is generally associated with troublesome adolescents or teenagers, it can be a serious crime under Title 2c of the New Jersey Criminal Code, that can carry significant consequences. In the state of New Jersey, shoplifting under N.J.S.A. 2c:20-11, is a somewhat broadly defined offense that, if committed, can result in punishments as minimal as community service and as severe as multiple years in prison, not to mention possible civil action. Shoplifting is categorized in six types of offenses, all of which can constitute charges ranging anywhere from a second-degree crime to a disorderly persons offense. There are certain requirements of proof the state has to deliver, and multiple defenses, some of which bode more effectively than others in shoplifting cases.

The term “shoplifting” is defined in full in N.J.S.A. 2C:20-11 as one of six acts. To be issued a charge of shoplifting, one of the six following actions are to have been accused.

(1)    Purposeful removal of merchandise from any merchant or vendor without payment of full retail value.

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