More Indictments for Scott McKee

(October 4) For those of us tracking the progress of former Eugene, Oregon financial planner Scott McKee through the court system, today the Lane County District Attorney Alex Gardner handed down an indictment with another 37 felony counts against him.

The total includes nine counts of aggravated theft in the first degree, one count of theft in the first degree, and 27 counts of securities fraud. This is in addition to four charges of aggravated theft in the first degree dating from February, an arrest for contempt of court charges arising from a civil matter in June, and his being barred from FINRA and ordered to repay former clients $584,000 in September.

(Lane County court documents)

FINRA Files Claim Alleging McKee’s Trail of Fraud

According to a complaint filed by the Financial Industry Regulatory Authority (FINRA) today, Tuesday, February 15th, J. Scott McKee defrauded investors of at least $370,000 and improperly used at least $650,000 of his client’s money for his own benefit. The Eugene Register-Guard reports that McKee left a trail of victims including our clients. You can read the full 27 pages of the FINRA complaint here.

If you had financial dealings with McKee please contact us immediately at 1-800-647-8130. We will tell you if we might be able to help you recover your losses. We are in close contact with the Eugene police and with FINRA. You can reach Detective Mercy McDonald at 541-62-5169, and the contact at FINRA is Anthony Trambley at 301-590-6500

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.

Continuing Investigation into James Scott McKee

A group of aggrieved investors, including a church congregation and retired people throughout Oregon, has retained Banks Law Office to recover losses from investing through James Scott McKee and Berthel Fisher. Our office has been investigating Mr. McKee and receiving complaints about him for months and we are now taking action. We have also fully cooperated with the Eugene Police Department Financial Fraud Detectives in their investigation, and we have spent many hours assisting FINRA in its enforcement efforts against Mr. McKee.

Fraud victims often go through a period of denial when they believed that the person who defrauded them was a trusted advisor. Our current clients, they now understand that they have been victims of investment abuse. If you have any doubt that your investments are safe, call toll free at 1-800-647-8130 or contact us for a free consultation.

Update for Clients of James Scott McKee and Berthel Fisher LLP

Scott McKee Investor Update:

In response to a number of recent inquiries from clients of Scott McKee, we are posting updated information. Here is what we can tell investors as of October 5, 2011.

  • McKee No Longer at Morgan Stanley

Mr. McKee’s last day at Morgan Stanley was September 30, 2011. At Morgan Stanley’s request, and after Mr. McKee did not respond to our several requests to discuss certain investments with him, we provided evidence to Morgan’s Stanley’s attorneys in San Francisco concerning an unauthorized investment that McKee had sold to one of our clients while he was at Morgan Stanley. We do not know if the evidence we provided had anything to do with McKee’s departure from the firm, but he was gone less than a week after Morgan Stanley received the documents from Banks Law Office, P.C.

  • FINRA Investigation Continues

Banks Law Office continues to cooperate with the attorneys at FINRA Enforcement who have requested documents and interviews of our clients who had dealings with Mr. McKee. FINRA has requested additional interviews and we are working to arrange them. FINRA’s investigation continues.

  • Master Investments

A number of investors have asked us about their investments in Master programs. To our knowledge, there are two Master investments that McKee sold. One was Master Private Equity, and the other was Master Fixed Income. The offering documents for Private Equity state that it was designed to (a) develop and invest in real estate projects, and (b) invest in securities selected by Mr. McKee. There are a number of fees identified in the offering documents including a 5% annual management and administration fee, plus marketing fees and finders fees. The offering documents state that the investment will continue for 7 years, and can be extended to 9 years. During that time, investors are not entitled to withdraw their funds. In addition, there is a stated distribution schedule that, at the conclusion of the investment, after a return of principal, any profits are to be distributed 80% to investors and 20% to the operators of the fund.

The Master Fixed Income Fund was designed to lend money to the Private Equity Fund. Thus, the two investments are different, but related.

We express no opinion at this time on whether the Master Funds have operated as they are described in the offering documents. However, several investors have told us that the nature of the investment was not described to them. I believe that the investments were relatively high risk investments because of the fees and the volatile nature of the real estate markets. There is nothing illegal about selling risky investments, so long as the risks are adequately explained to the investors prior to the time of purchase. Based on the information we have from some investors, at least some sales were illegal because neither the risks nor the amount of time that the investments are locked up were disclosed.

  • Not-Traded REIT Investments

Virtually all McKee clients who have contacted us were heavily invested in non-traded REIT investments. There is nothing illegal about non-traded REITs, but like other investments, the risks and characteristics of the investments have to be disclosed to investors before the time of purchase. Non-traded REITs are often laden with fees, and are usually difficult to get out of. And, it is hard for investors under current regulations to find out what their investment is worth. Values are usually based upon a stated value at the time of purchase, and may have nothing to do with the true value of the investment. And, even when investors receive payments, those payments may not represent a return of profits, but merely a return of the investor’s money. So, non-traded REITs are not appropriate for many investors, and it is rare that it is appropriate to place the majority of an investor’s portfolio into these investments. Just yesterday, FINRA (the Financial Industry Regulatory Authority) published a warning to investors on non-traded REITs. An article about the warning appeared in Business Week magazine.

  • Banks Law Office Plans

Banks Law Office will be filing a FINRA arbitration claim on behalf of investors against Mr. McKee and Berthel Fischer Investments for the sale of an investment in Bedrocks Coffee, and possibly other investments that were not approved by Berthel Fischer for sale.

Clients of J. Scott McKee Gathered

Clients and former clients of financial advisor J. Scott McKee met in Eugene, Oregon last night with attorney Robert Banks to discuss their investment losses and hear an update about Banks Law Office’s investigation into McKee and the investments he sold. Investors were told about their investment rights, and there was a discussion about bases for liability of Mr. McKee, as well as Morgan Stanley, Berthel Fischer, LPL Financial and the promoters of some of the investments McKee sold.

Investors in attendance have submitted and are submitting additional information about their investments for our evaluation and recommendations. We expect to make decisions shortly on a recommended course of action to seek refunds for the amounts paid for these investments.

If you are a McKee investor with information to offer, or if you wish us to evaluate the investments you purchased through Mr. McKee, please call or email our office to confidentially discuss your situation. You can also check our blog for updates on this situation.

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.

Former LPL Financial and Berthel Fisher Broker Under Investigation

Banks Law Office, PC is conducting an investigation of former LPL Financial and Berthel Fisher & Co. broker Scott McKee and his company, Quality Financial Group for fraud, negligence, and misuse of his customers’ accounts. We have reason to believe that for years, Mr. McKee recommended high risk, and sometimes fraudulent investments to his customers. Many of those customers are now demanding their money back, but Mr. McKee has either refused or is unable to return his customers’ investments. One of Mr. McKee’s recommended investment vehicles was a complicated Defined Benefit Pension plan called the “Charlie Plan.” The “Charlie Plan” utilized large whole life insurance policy premiums and other complicated investment tools as a way of avoiding taxes, providing a death benefit, and accumulating wealth. This plan is extremely complex and requires a significant up-front investment. Banks Law believes that Mr. McKee did not adequately explain the details of the “Charlie Plan” to his customers and that even if it was explained, it was not a suitable investment for most, if not all of the customers who purchased it. In addition to the unsuitable “Charlie Plan,” Mr. McKee’s also recommended that several of his customers purchase non-recourse promissory notes in the UpTown Development project in Eugene, OR. These notes were sold without adequate disclosure documents, and provided the customers with no recourse if the project failed. Perhaps most concerning is that money appears to have simply disappeared from some of Mr. McKee’s customers’ accounts, and to our knowledge Mr. McKee has not provided a valid explanation for the missing funds. Banks Law Office is a nationally recognized law firm with a focus on representing clients whose investments have been lost due to mismanagement and fraud. Our firm has already successfully settled a case against Mr. McKee on behalf of one former customer, and we believe there are several other victims who are trying to recoup their investments, but have thus far been unsuccessful. If you believe that you are a victim of investment fraud or negligence by Scott McKee, we may be able to help. Please call us at 1-(888) 291-7956 or (503) 226-2966.