Judge Orders Attorney to Pay Nearly $4 Million in Prime Bank Investment Scheme

Every day I deal with cases of investment brokers or firms who perpetrate acts of fraud or who fail to uphold their fiduciary duties to their clients. Seeing these actions committed against unsuspecting investors on a frequent basis is what motivates me to work in the field of stock fraud law. Sometimes, however, even I have to shake my head at the depth of which this type of corruption occurs. How one or two individuals manage to get so many others to agree to be complicit in these cases of investment impropriety is often surprising. Such is the case with Bernard H. Butts, Jr., a Miami, Florida-based attorney. Granted, as attorneys, influencing others is part of what we do, but it is generally to protect the best interests of our clients, not to pad our bank accounts.

Last September, the Securities and Exchange Commission secured an emergency court order to terminate a prime bank scam propagated by Butts and several of his associates. Prime bank scams are deceitful investment practices that claim to offer considerable profits on investments, often as much as 100% annually. Typically these work in Ponzi-scheme fashion with those touting the investments ultimately draining the investment funds for personal gain. Such was the case with Butts, his cohorts, and several companies with which they were affiliated.

The SEC’s complaint states that Butts; Douglas J. Anisky; James Baggs, Sidney Banner of Express Commercial Capital, LLC; and Fotios Geievelis, Jr. (a.k.a. Frank Anastasio) of Worldwide Funding III Limited, LLC solicited funds from about 45 U.S. and international investors which amounted to over $3.5 million dollars.

Worldwide Funding for which Geivelis is the manager and registered agent, promised investors returns of nearly $8.7 million (U.S.) within 15 to 45 days of investing $60,000 to $90,000, with further returns of 14% a week for the following 40 to 42 weeks. Butts fulfilled the role of escrow agent for these transactions while also soliciting investors. Both men told investors that these funds would remain in the escrow account established by Butts until the company had gotten the bank instruments that were needed to produce the pledged funds. This did not occur as Butts immediately removed the funds from his trust account. He then parceled out about 45% of the money to Geivelis, 10% to sales agents, and kept about 45% for his own personal gain.

The SEC charges that these monies were not used to purchase the promised bank instruments, but instead Geivelis used his pay-out from the escrow account for his personal benefit for things such as travel and gambling. Anisky, Banner, Express Commercial Capital, and Baggs are implicated in the investigation because each sold interests in the scam even though they knew it was a deceptive endeavor.

The complaint goes on to charge each defendant with violations to various sections of the Securities Act of 1933, as well as violations of the Securities Exchange Act of 1934. Furthermore, the complaint states Butts, Geivelis, Anisky, Banner, Express Commercial Capital, and Baggs committed violations of Section 15(a) of the Exchange Act. Additionally, Bernard H. Butts, Jr. PA; Butts Holding Corporation; Margaret A. Hering; Global Worldwide Funding Ventures, Inc.; and PW Consulting Group LLC have been named as relief defendants because it is believed that they may have received ill-gotten assets from the scheme and that those funds should be returned to investors.

When the complaint was filed last year, the SEC’s request for emergency relief including a temporary restraining order and an asset freeze was granted by the court. This was to prevent any remaining investor funds from dissipating. The SEC was also seeking permanent injunctions, the return of the illicit funds, and monetary penalties from each of the defendants.

In a consent judgment earlier this month regarding this case, federal judge, the Honorable Jose E. Martinez, ordered Butts to pay nearly $4 million as a result of his orchestration of the prime bank fraud. This $4 million is to be returned to those investors who were duped by Butts and his cronies. This amount includes $1,691,608 in disgorgement, $96,232.99 in pre-judgment interest, and $2,059,284.19 as a penalty. Additionally, Butts and his wife, Margaret A. Hering, must also disgorge $100,000 and pay $4,570.82 in pre-judgment interest. All funds received by the SEC will be returned to harmed investors through a Fair Fund. To date, more than $1.9 million has been transferred from the accounts of Butts and his companies to the registry. The court order also mandates that an additional $2+ million that was seized from Butts and his companies by the U.S. Secret Service must also be transferred to the registry.

Butts has agreed to be barred from the securities industry and to be suspended from practicing as an attorney on behalf of any entity regulated by the SEC.

The SEC states that there are red flags that help investors to avoid being victimized by high-yield investment program scams. Just a few of these are excessive guaranteed returns, fictitious financial instruments, extreme secrecy, claims that the investments are an exclusive opportunity, and an inordinate complexity surrounding the investments.

The Blum Law Group specializes in helping people who have been victimized by brokers or investment firms. If you believe you have suffered financial losses as a result of the acts of fraud and misrepresentation by Mr. Butts or any of the other defendants in this matter, please give us a call at 1-877-STOCK-LAW for a free consultation.