Frank J. Capuano, Ex-Royal Alliance Broker, Named in Claim Seeking Damages for Ponzi Investment

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Marquardt Law Office LLC is interested in speaking to former customers of Frank J. Capuano who purchased promissory notes in a Woodbridge Mortgage Investment Fund.

In March 2018, a customer filed a claim against Capuano, a former Royal Alliance Associates broker.  The claim seeks losses Capuano allegedly caused by selling a customer an investment that turned out to be a Ponzi scheme.

Capuano had previously been sanctioned in connection with sales of investment in a Ponzi scheme.  On April 21, 2016, the Financial Industry Regulatory Authority, Inc. (FINRA)—the self-regulator of brokers and brokerage firms—suspended Capuano for engaging in a private securities transaction that he did not disclose to Royal Alliance.  FINRA said the transactions involved Capuano selling about $1.1 million in promissory notes of Woodbridge Mortgage Investment Funds to nine of Royal Alliance’s customers.  Recently, it has been widely reported that the Woodbridge Funds are a massive Ponzi scheme.

Capuano entered the securities industry in 1983.  He was registered as a General Securities Representative with Royal Alliance Associates LLC from November 1989 through July 2015.

Separately, the Securities Exchange Commission (SEC) brought charges against the Woodbridge Mortgage Funds and its operators.  The SEC alleges the funds were a Ponzi scheme involving 235 companies used to bilk over 8,400 investors out of more than $1.22 billion.  Robert Shapiro, who controlled the companies, and others raised funds in them by promising to repay investors from high rates of interest earned on third-party loans secured by real estate, alleged the SEC.  In reality, the Woodbridge companies generated little income from third-party loans, and huge amounts of investors’ funds were used to fund Shapiro and his family’s lavish lifestyle, said the SEC.  To conceal the fraud, funds raised from new investors were also used to make payments to other investors that were misrepresented as interest payments.

Investment Recovery Options

“Private securities transactions” occur when brokers sell or promote transactions involving securities that are not on their firm’s list of preapproved securities.  Brokers must obtain approval from their firms before participating in private securities transactions, and failure to do so is a securities violation known as “selling away.”  Selling away often involves risky, illiquid investments, and sometimes frauds like Ponzi schemes.

A firm, like Royal Alliance Associates, may be liable for losses caused by its brokers selling away, even if the firm is unaware it occurred.  A firm has a duty to reasonably supervise its brokers to ensure they do not commit violations.  This includes a duty to implement and maintain reasonable procedures to detect and prevent selling away.  Additionally, a firm must investigate red flags of selling away.

If you purchased investments in Woodbridge Funds with Frank J. Capuano, contact Marquardt Law Office LLC to speak with a securities lawyer.  You will receive a free phone consultation, and investors are represented on a contingency fee basis.

Marquardt Law Office LLC is a securities law firm representing clients nationwide in FINRA arbitration who have suffered losses due to fraud and negligence.

Adam J. Marquardt

Adam Marquardt represents investors in securities litigation claims such as unsuitable investments, negligence, and fraud. He is dedicated to recovering financial losses for investors, primarily through FINRA arbitration. Adam’s background includes experience as a FINRA regulator, an accountant and auditor, and an attorney who recovered $8 million litigating cases involving fraudulent financial practices. Adam previously passed the Certified Public Accountant (CPA) exam and is an attorney licensed in Illinois.

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