Last week, a California Superior Court Judge refused to certify class action claims by investors against MetLife Securities and New England Securities in connection with the fraudulent recommendation and sale of the securities of Diversified Lending Group Inc. to public customers.
Representatives of New England Securities including Lawrence E. Bagby Jr., James C. Davidson
Scott Brandt and Dennis Lawton, under the direction of Tony Russon, the purported “manager partner” of the Woodland Hills California office of New England Securities, also doing business as the Russon Agency, are alleged to have held investment presentations and recommended the purchase of a $200 million Ponzi scheme to at least 211 unsuspecting investors.
Diversified Lending Group was a Fraudulent Investment Scheme
According to the United States Securities & Exchange Commission, Diversified Lending Group was a fraudulent investment scheme effected by its president, Bruce Friedman that raised at least $216 million dollars by offering and selling securities in the form of one- or five-year investment notes to investors, many of whom were older Americans.
Diversified Lending Group however did not invest the money it raised as represented in real estate and mortgages, but instead diverted a substantial amount of the investors’ money to undisclosed business ventures of Friedman unrelated to real estate or mortgage lending, and Friedman also misappropriated a minimum of $17 million to support his lavish lifestyle, including purchases of a luxury home, expensive cars, vacations, jewelry, and designer clothing and accessories, including at least $275,000 of investors’ funds for the personal use of his girlfriend.
Russon, a resident of Los Angeles County, as the owner of Russon Agency, and supposedly the “managing partner” of New England Securities Woodland Hills’ office the Regional Manager of Met Life, organized, produced and presided at a meetings of Agents and Brokers affiliated with MetLife and Salespersons make a presentation about Diversified Lending Group including promoting the company’s 9% purported Reinsured Investment Notes and the 12% Corporate Guaranteed Notes. Russon and the others are also alleged to have represented to customers that the Diversified Lending Group securities, could be utilized as a form of “premium financing” to enable individuals to generate income, which income in turn could be utilized to purchase and pay the premiums associated with certain MetLife insurance products.
Of course, once the fraud was uncovered, investors substantially their entire investment. A receiver has been appointed. However, most recently the prospect of any meaningful recovery from Diversified Lending Group looks bleak.
Hope for Diversified Lending Group Investors
However, all may not be a loss for Diversified Lending Group investors purchasing these securities upon the recommendation of agents of MetLife and New England Securities. Notwithstanding the large number of customers sold these securities, an at least twenty complaints against the individual brokers, MetLife and New England Securities purport that they it was unaware of these “unapproved” activities. However, MetLife and New England Securities are not only responsible for the conduct of their agents, MetLife and New England Securities have a duty to supervise its brokers and the activities conducted in its Woodland Hills franchise branch office.
Moreover, Russon and the other brokers have a duty to conduct due diligence prior to recommending or otherwise making representations about Diversified Lending Group to customers.
Although some of this conduct occurred or was discovered sometime in 2009, given that the class actionwas rejected just last week, Investors may be able to pursue their claims in FINRA arbitration because under FINRA Rules the six-year time limit on the submission of claims apply to any claim that is directed to arbitration by a court of competent jurisdiction.
FINRA arbitration works similarly to court proceedings in many ways, and it is a forum in which victimized investors regularly recover losses resulting from Ponzi schemes and other fraudulent investments.
Investors purchasing the Diversified Lending Group through agents of Metlife Securities, New England Securities, Tony Russon, Lawrence E. Bagby Jr., James C. Davidson, Scott Brandt or Dennis Lawton, however, need to act quickly and are well advised to consult with qualified counsel without delay.
Guiliano Law Group
The Guiliano Law Group, P.C. Practice limited to the representation of investors in claims against stockbrokers and investment professionals for fraud, the sale of unsuitable investments, breach of fiduciary duty, failure to supervise. National Practice. Contingent Fee. Free Consultation. If you have suffered losses a the result of the recommendation of inverse and leveraged ETFs by your stockbroker or investment professional and were unaware of the risk associated with these securities, contact us for a free confidential evaluation at (877) SEC-ATTY.