Investors Warned of J. Scott McKee

Banks Law Office Continues To Warn Investors Not To Conduct Business With J. Scott McKee

Since last summer, Robert Banks has been warning investors not to do business with Scott McKee, formerly with the brokerage firms of Morgan Stanley, Berthel Fisher and LPL Financial. Many were skeptical at the time and insisted that Mr. McKee had done nothing wrong. Most of McKee’s former clients have since come to realize that Banks was right and they should not have trusted McKee with their money. Unfortunately, there are still some investors who doubt our advice, and continue to trust Mr. McKee and believe that their investments are safe and conservative. We are concerned for those investors, and urge them not to agree to any transactions with Mr. McKee without first consulting with our law office or a reputable investment advisory firm that has never had any relationship with McKee.

Banks Law Office has taken steps to recover $600,000 of investments lost in Bedrocks and DeWitt/Grand Slam for investors who listened to our advice at the outset. We are also continuing to receive reports of other fraudulent investment sales and thefts of large sums of money from customer accounts. Investors who made investments with McKee from December, 2010 through the time he was terminated at Morgan Stanley may have the best chance of recovering their losses, and we continue to discuss those cases with investors.

Interested persons should check our website regularly for updates on the McKee situation. If you gave money to Mr. McKee and cannot account for it, contact our office and we will try to help.

Demand Sent on Behalf of Former Scott McKee Investors

Banks Law Office PC Sends Demand on behalf of former Scott McKee investors in Oregon and Washington for return of losses in Bedrocks and DeWitt/Grand Slam

Our office has sent a detailed settlement demand letter to Berthel Fisher & Co. Investment Services, outlining investment losses of more than $650,000 from illegal investment transactions involving Bedrocks Coffee and DeWitt/Grand Slam. McKee made some of the investments without the prior knowledge or consent of McKee’s clients.

For the other investments at issue, our clients were not told the truth about the so-called investments. Berthel Fisher lawyers have agreed to review and discuss our claims and attempt to settle them. We are hopeful that we can reach an agreement with Berthel Fisher because of the blatant violation of the securities laws and damages suffered by our clients. If we are not able to reach a settlement soon, we will be filing a FINRA arbitration claim for our client group demanding a return of their investment losses.

If you have made any investments with Scott McKee or if you have had a similar experience with another financial advisor, please give us a call or fill out one of our confidential case analysis forms.

Investigation Into Scott McKee Expands

Our office continues to receive complaints and information regarding James Scott McKee. We are offering our information as a public service to investors, and as a part of our commitment to assist state and federal regulators performing their own investigations. In addition to our current investigation into Bedrocks Coffee, we are now investigating other illiquid investments, including Master Development, and Ventis Investment Properties.

One of our new clients entrusted $1,000,000 to McKee and has discovered that much of that money went into high risk, illiquid investments that benefitted McKee, not our client. Our client never gave permission to invest money into Bedrocks Coffee, and did not even know about the investment until receiving a free pound of coffee and a thank you letter in the mail from Bedrocks. Our client had never heard of Bedrocks before getting that letter. We have evidence that McKee took $10,000 of the $50,000 that was taken from our client’s account as a fee for making the investment. Our client had no prior knowledge of any of this.

In addition, we have evidence that McKee raised money for Ventis Investment Properties. We are still investigating what that is, but information we obtained from the State of Oregon shows J. Scott McKee as registered agent and member of the company. McKee told our client to invest $100,000, and our client was never given any paperwork whatsoever about the investment, and had no idea that this was Mr. McKee’s business. Our client has not been able to obtain any information about what happened to the $100,000.

We plan to file claims and present these and other facts to a FINRA arbitration panel, seeking recovery of the lost investment funds.

Meanwhile, Mr. McKee’s record with FINRA reflects that additional claims have been filed in 2011. One claim for misrepresentations and losses of $362,000 by an investor was reported as paid. Another claim against McKee for misrepresenting investments and losses of $20,000 by an investor is listed as pending as of June, 2011. Still another investor has made a $48,000 claim for McKee’s misrepresenting a real estate investment.

Investors are beginning to realize what we have been saying for some time now – that investments that McKee sold while a Eugene representative at Berthel Fisher, LPL, and now Morgan Stanley were sold illegally, and were grossly misrepresented.

We are holding an informational meeting for investors who purchased investments through McKee and his brokerage firms at the Valley River Inn in Eugene on August 30, 2011 at 6:30 p.m. More details are available by clicking here.

NOTE: for a March 2013 update on the Scott McKee matter, see this blog post.

Meeting for Quality Financial Group Investors

Banks Law Office has received additional calls from investors and has continued its investigation into “off the books” investments sold through Scott McKee and Quality Financial of Eugene, Oregon. We will hold an informational meeting to report our findings and opinions on August 30, 2011 from 6:30 – 8:00 p.m. at The Valley River Inn, North Columbia Ballroom, 1000 Valley River Way, Eugene, Oregon. Further information about our investigation and the meeting can be found in our letter sent to Bedrocks Coffee Investors in our letter to investors.

Bedrocks Coffee, LLC Investigation

Selling Away Claims Under Investigation

When a financial adviser sells an investment to a client that has not been investigated and approved for sale by his brokerage firm, it is called “selling away” in the financial services industry. Financial advisers and stock brokers who engage in selling away are effectively paid a commission under the table, since their stock broker firm is not aware of the sale. Selling away is illegal, and the investor is normally entitled to get their money back from the adviser and/or his brokerage firm.

Banks Law represents investors in selling away cases in FINRA arbitration, which is where these claims are normally resolved. Selling away claims often involve securities fraud, because the investors are not told about the level of risk involved in the investment, and because the financial adviser never tells the investor that the product has not been approved for sale. Oftentimes, these investments are not registered with the SEC, which can be another violation. They are often sold as promissory notes or LLC interests, or tenant in common (TIC) investments. One warning sign that you might have been a selling away victim is if your financial adviser or stock broker sold you an investment that does not appear on your brokerage account statements. There are some approved investments that do not appear on your regular monthly or quarterly statement from your brokerage firm, but not many.

Banks Law is currently investigating a number of selling away violations. Our earlier blog mentioned investments in Uptown Development and Charlie Plan. We can now add Bedrocks Coffee, LLC, to that list. All of these companies are based in Oregon. All investments were sold by an Oregon financial adviser without the approval of his firm. We have been contacted by several parties who have asked for representation and information about these investments, which were sold by a financial adviser in Eugene, Oregon. If you invested in these companies and have questions, please contact us.