New York City, NY – June 14, 2017 – Attorney General Eric T. Schneiderman today revealed a claim versus Dean Mustaphalli and numerous of the entities he manages for supposedly participating in a six-year plan to defraud New Yorkers– much of whom were senior and at or near retirement– from countless dollars of their cost savings. The fit declares that Mustaphalli triggered his customers to purchase his hedge fund where he took part in an extremely speculative and dangerous trading technique– versus their interest and without their understanding. The grievance declares that Mustaphalli understood that his trading technique for the hedge fund disagreed for his customers, who had an interest in more conservative financial investments, which this triggered his customers to suffer destructive losses.
The Attorney General declares that since 2011, Mustaphalli triggered 58 New York financiers to invest an overall of more than $11 million in his hedge fund, $10 countless which was lost by taking part in an extremely dangerous trading technique that was not constant with his customers’ financial investment profiles and goals. In addition, the Attorney General declares that Mustaphalli took an extra $100,000 from his hedge fund to spend for his own personal expenditures. While the examination of Mustaphalli was continuous, Attorney General Schneiderman looked for and acquired 2 orders from New York Supreme Court freezing accounts of Mustaphalli’s entities and restricting them and Mustaphalli from providing financial investment guidance in New York.
” It is outrageous to rip-off senior New Yorkers who are attempting to prepare for retirement,” stated Attorney General Schneiderman. “As we declare, Dean Mustaphalli wasted and robbed $10 million from hardworking people. New Yorkers are worthy of to know that their financial investments are safe– and monetary experts who will not play by the guidelines will deal with repercussions.”.
Mustaphalli’s plan targeted senior New Yorkers who had been his financial investment advisory customers for several years before he opened his hedge fund, and who had hardly any previous financial investment experience. As their financial investment consultant, Mustaphalli understood that these financiers had reasonably conservative financial investment goals.
Starting in 2010, having been consistently put under increased guidance by his previous companies’ due to customer grievances – and later on having actually been suspended from the securities market– Mustaphalli moved his customers’ possessions to a platform that would hide his dangerous trading activity. Without description, and just stating that the fund would be “much better” for customers, Mustaphalli diverted his customers’ fairly safe financial investment portfolios to a hedge fund run exclusively by Mustaphalli. Mustaphalli then continued to lose the huge bulk of his customers’ money on speculative options trading and other extremely levered techniques. When the hedge fund possessions had decreased such that they did not produce considerable management charges, Mustaphalli moved $100,000 from the fund, through shell business, to spend for his own personal expenditures. Mustaphalli looked for to deflect blame for the losses, presumably informing financiers that the losses were because of “oil, bad markets, and the election.” Mustaphalli even assured one financier “if Hillary wins, you’ll get your refund.” He informed yet another financier that “Brexit” was to blame for the Fund’s losses.
The complete Complaint submitted today in New York State Supreme Court is offered here.
Attorney General of the United States Schneiderman thanks the Financial Industry Regulatory Authority (FINRA) for supplying details valuable to the examination.
The examination of this matter was managed by Assistant Attorney General Kenneth J. Haim of the Attorney General’s Investor Protection Bureau under the guidance of Investor Protection Bureau Chief Katherine C. Milgram. Senior Citizen Enforcement Counsel for Economic Justice Steven Glassman, Assistant Attorney General Tanya Trakht, Investigator Brian Metz, and Legal Assistant Eddie Aguilar likewise helped with the examination. The Investor Protection Bureau is supervised by Executive Deputy Attorney General for Economic Justice Manisha M. Sheth.