Securities Fraud Attorney Mark A. Tepper has filed a new round of claims with the Financial Industry Regulatory Authority (FINRA) against Minneapolis-based Questar Capital, alleging “failure to supervise” a Questar Capital broker-dealer named Edward Gelb.
Tepper alleges that Gelb, a Questar Capital broker, deceived a number of his Questar clients into investing substantial sums of money in what turns out to have been a Ponzi scheme disguised as a "safe, guaranteed investment.”
Earlier this year, Tepper filed a similar set of claims with FINRA on behalf of four other Gelb clients. These claims were settled for an undisclosed amount. Noting that FINRA requires parties to settlements to sign confidentiality agreements that prevent them from disclosing any details, Tepper said, “I can tell you my clients were grateful for my representation.”
Records on file at FINRA show that on May 27, broker Gelb, in a consent agreement with the regulatory agency, was permanently barred from the financial advisory and brokerage business following allegations that he had defrauded a number of individuals -- including at least 16 of his Questar clients -- of $1.8 million in the Ponzi scheme, which was known as IPDS, and later as JP Mumbles.
Grand larceny and fraud charges were brought earlier by the Suffolk County, N.Y. district attorney’s office against John Konoski, who ran the JP Mumbles scam. Konoski, according to Tepper, pled guilty to the charges.
According to the allegation in Gelb’s FINRA file, Gelb conducted his fraudulent investment activities with clients using a private email account. Konoski, in a plea bargain with the District Attorney, pled guilty to four of the charges in the case.
FINRA states that “although [Questar Capital] was aware of the outside email account, Gelb had not been approved to utilize that email address to conduct securities-related business. By operating an outside email account for securities-related business without the firm’s knowledge and consent, Gelb prevented his firm from reviewing his emails” as required under FINRA rules.