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Can I Recover Losses from Former PFS Investments Inc. Financial Advisor Mike Lundy Jr.’s Ponzi-like Scheme?

Posted on Thursday, June 1st, 2017 at 2:12 pm    

Erez Law is currently investigating former PFS Investments Inc. financial advisor Barkley JW Lundy Jr. (aka Mike Lundy Jr.) (CRD# 2260127) regarding a $4.2 million Ponzi-like scheme. Lundy was registered with PFS Investments Inc. in Rapid City, South Dakota from 1992 to 2014, when he was terminated regarding, “Our firm obtained information indicating that the agent may have mishandled customer funds.”

In February 2017, Lundy was convicted of wire fraud making and subscribing a false tax return, according to a release by the United States Attorney’s Office of the District of South Dakota. It is alleged that Lundy recommended that his clients invest in Associates Investments, a company that Lundy claimed offered investment opportunities in municipal bonds and other securities; however the money Lundy received from his customers was never invested. According to the conviction, Lundy’s former customers gave him $4.2 million, which Lundy deposited into his personal checking account. In a Ponzi-like scheme, Lundy made payments to some investors funded by payments from other new investors.

In May 2017, Lundy was sentenced to 5 years in prison, followed by 3 years of supervised release, as well as $1.37 million in restitution to his former clients, $257,399 in restitution to the Internal Revenue Service (IRS), and $100 to the Federal Crime Victim’s Fund.

In September 2014, FINRA barred Lundy from acting as a broker or otherwise associating with firms that sell securities to the public. According to the Acceptance, Waiver & Consent, “Lundy consented to the sanction and to the entry of findings that he received funds from at least 20 customers of his member firm and deposited those funds into his personal bank accounts.” It is alleged that Lundy had a list of those customers and a payment schedule from his personal bank account, all of which was unknown and unauthorized by PFS Investments, Inc. According to his CRD, “Lundy transferred funds from his personal account and then back into the customers’ bank accounts and then further transferred funds into each of those customers’ firm accounts. Lundy then arranged for each of those customers to purchase additional shares of mutual funds held by the customers. Lundy represented to each of the customers that the fund movements were akin to ‘dividend reinvestments’ in their mutual funds. The findings also stated that at least one customer requested that lundy provide him with the appropriate tax forms to account for the monthly payments and upon that request, lundy provided the customer with a fabricated tax document bearing falsified information. Lundy misrepresented to the customer that the document was created and provided by the firm.”

Lundy has also been the subject of six customer complaints between 2014 and 2016, according to his CRD report:

November 2016. “[Customers] allege that they gave Mr. Lundy $50,000 to invest in an outside business and they were not fully repaid. The outside business was not disclosed to the firm.” The customer sought $30,902 in damages and the case was settled for $19,800.

November 2016. “Cuatomers (sp) allege that representative did not fully repay them for an investment in a non-PFSI product.” The customer sought $49,037 in damages and the case was settled for $24,500.

June 2016. “Customers allege the registered representative did not fully repay them under the terms of a purported investment.” The customer sought $40,500 in damages and the case was settled for $25,000.

March 2016. “Customers allege that they gave money to mr. Lundy for an investment with “Associates” and were not fully repaid.” The customer sought $100,000 in damages and the case was settled for $70,000.

November 2015. “Customer alleges that representative did not fully repay her for an investmet (sp) in a non-PFSI product.” The customer sought $241,582 in damages and the case was settled for $100,000.

August 2014. “Customer alleges that representative sold her a non-pfs investments inc. Product and she is concerned that she may have lost the remaining balance in her investment.” The customer is seeking $5,000 in damages and the case is currently pending.

Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, PFS Investments Inc. may be liable for investment or other losses suffered by Lundy’s customers.

Erez Law represents investors in the United States for claims against former PFS Investments Inc. financial advisor Barkley JW Lundy Jr. (aka Mike Lundy Jr.), who is alleged to conduct an elaborate $4.2 million Ponzi-like scheme. If you were a client of former PFS Investments Inc. financial advisor Barkley JW Lundy Jr. (aka Mike Lundy Jr.) or another firm, and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.