Attorney David Neuman Is Quoted in the Pittsburgh Post Gazette Regarding Investment Fraud Claims Filed by Pennsylvania VFW Related to Doug Simanski Scam
Attorney David Neuman was quoted in the Pittsburgh Post Gazette on November 1, 2016. The article was written by Len Boselovic. The article is primarily about a VFW Post from Ashville, Pennsylvania that was victimized by former financial advisor Douglas Simanski. Simanski previously worked with Next Financial Group between 1999 and June 2016.
Simanski defrauded a number of Pennsylvania investors, including the Ashville VFW, and many others. Israels & Neuman represents the Ashville VFW, as well as several other victims who lost money with Douglas Simanski and Next Financial Group.
A link to the article can be found here: http://www.post-gazette.com/business/pittsburgh-company-news/2016/11/01/Veterans-others-say-Cambria-County-broker-took-their-money/stories/201610310068
The article states:
Veterans, others say Cambria County broker took their money
By Len Boselovic / Pittsburgh Post-Gazette
Members of VFW Post 4315 in Ashville, Cambria County, trusted Douglas Simanski.
The financial adviser and his family were well known in the small rural community, located about 10 miles northwest of Altoona. Mr. Simanski’s father, now deceased, was a member of the post. Douglas Simanski and three brothers are social members, helping the post win a golf league title three years in a row. Their mother, Vera, is an auxiliary member.
“His mother is the nicest person you’d want to meet,” said Dave Seymore, 67, who took over as post quartermaster last year.
Mr. Seymore isn’t saying similar things about her son. Douglas Simanski is accused of stealing $120,000 from the post after persuading its members in 2008 to invest in a supposedly safe CD that would pay 4 percent interest.
The allegations against Mr. Simanski involve affinity fraud: using ethnic, religious or other ties with a group of people to take advantage of them. His pitch had even more allure because what Mr. Simanski offered was a high-interest rate return in a low interest rate environment.
It’s an offer that sounds too good to be true. Industry regulators agreed. They have banned Mr. Simanski from the business and prompted federal prosecutors to look into his activities.
Post members discovered in June that the money was gone. At about the same time, other investors, including at least three VFW members, were discovering that all or some of their money was missing.
“From what we understand, it was close to $3 million that was taken,” said Nicholas Guiliano, a Philadelphia attorney who is representing several of Mr. Simanski’s clients.
Mr. Guiliano said his clients include a truck driver and a factory worker. Collectively, they probably lost about $1.5 million, he said. In all, about two dozen investors were involved, he said.
“They are not sophisticated people … They are working class people,” Mr. Guiliano said.
Next Financial Group, the Houston, Texas, brokerage firm Mr. Simanski worked for, dismissed the broker in May. James McGovern, a Pittsburgh attorney representing Next, declined to comment on the allegations. He provided a statement from the firm indicating that Next has reported what happened to the U.S. Attorney’s office, which has begun an investigation.
U.S. Attorney David Hickton confirmed his office is investigating Mr. Simanski. He declined further comment.
Mr. Simanski did not respond to telephone messages for him that were left with his wife and one of his brothers.
A plain sheet of paper
Mr. Seymore, a combat engineer who did two tours of duty in Vietnam, was not at the November 2008 meeting when members voted to take $120,000 raised from dues, club operations, and fundraising out of the bank and put it into the 4 percent CD Mr. Simanski was offering. At Mr. Simanski’s request, the check was made out to E-Trade Clearing.
“The money was in the bank. It wasn’t paying much interest,” Mr. Seymore said. “According to the financial people, that was a pretty good rate. On paper, it looked pretty good.”
The post rolled over the three-year CD in 2011 and again in 2014. When Mr. Seymore took over as quartermaster in March 2015, he asked for a statement outlining how the investment was performing.
He said all he received from Mr. Simanski was some numbers on a plain sheet of paper indicating the CD was performing as advertised. It was the same format Mr. Simanski used on previous statements, none of which were on Next letterhead, Mr. Seymore said.
Mr. Seymore discovered the money was missing when the post wanted to cash in the CD to pay for a paving project.
Andrew Stoltmann, a Chicago attorney representing three Post 4315 members, said Mr. Simanski offered them investments that were described as safe and that carried a high rate of return. It was an appealing pitch to the post members, who were unsophisticated, more than 60 years old, and relied on what a fellow member told them, Mr. Stoltmann said.
“They’re out about a total of $300,000,” he said.
Dave Neuman, the Bellevue, Wash. attorney representing the VFW, said he also is representing two other couples who invested with Mr. Simanski and collectively lost about $180,000.
In a complaint against Next Financial that Mr. Neuman filed with the Financial Industry Regulatory Authority on behalf of the VFW, he alleged that Mr. Simanski was the apparent owner of the E-Trade account where the post’s check was deposited. Mr. Simanski may have made some trades on the account, but “for the most part Simanski misappropriated many of his clients’ funds instead of investing it on their behalf,” according to the complaint.
Barred from industry
FINRA is an investment-industry group that polices about 3,900 broker firms and nearly 642,000 brokers who work at the firms. The regulator barred Mr. Simanski from the industry in June after he failed to turn over materials FINRA asked for as part of its investigation.
Mr. Neuman and other attorneys either have filed or are preparing to file complaints with FINRA against Next, alleging the firm failed to oversee Mr. Simanski.
“Next has an absolute duty to have known this,” Mr. Guiliano said.
In its statement, Next said that when it became aware of the allegations, the firm terminated Mr. Simanski.
“Mr. Simanski went outside of our established procedures to sell alleged investments, promising high rates of return but providing little or no documentation,” the statement said. “It’s important to note that no funds invested through Next were affected.”
Lawyers for the investors are targeting Next because they believe Mr. Simanski won’t have any money to compensate their clients. “In my experience, going after somebody like Simanski is a waste of time,” Mr. Neuman said.
Douglas Simanski’s mom and brothers still visit the VFW’s bar, but “there’s not a lot of talk about what’s going on,” Mr. Seymore said.
While he and other members wait to see if anyone else will take action against Mr. Simanski, they have done all they can.
“He’s been barred from the VFW,” Mr. Seymore said.
Len Boselovic: email@example.com or 412-263-1941.
Click to view: Pittsburgh Post Gazette Article