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Anthony Prieto Allegedly Defrauded Investors Through Sham Non-Profit

Anthony Prieto (CRD #: 2783560), a previously registered broker, is the subject of an SEC civil action, according to his BrokerCheck record, accessed on June 5, 2022. Keep reading if you have questions about Anthony Prieto’s conduct as a broker.

SEC Complaint

On May 2, 2022, the Securities and Exchange Commission filed a complaint against Anthony Prieto, Jason Lazarus, Synergy Settlement Services, Foundation for Those with Special Needs, and Special Needs Law Firm.

The complaint alleges that these collective defendants fraudulently operated two supposedly charitable pooled investment trusts with $46 million in assets and over 380 trust members, consisting primarily of disabled recipients of Medicaid or Social Security Supplemental Security Income (SSI) benefits. 

The SEC alleges that the Foundation for Those with Special Needs is a shell corporation created by Anthony Prieto and other defendants to disguise that for-profit corporation Synergy Settlement Services, Anthony Prieto, and Jason Lazarus “perform all trustee functions and profit from the trusts’ operations by collecting all fees and other funds stemming from operating the trusts.”

Alleged Misrepresentation to Beneficiaries

According to the complaint, the defendants collectively misrepresented to potential beneficiaries that they would be joining a trust managed by a non-profit association and would therefore remain eligible for Medicaid and SSI benefits.

However, the SEC alleges that the for-profit operation and management of the trusts could potentially disqualify beneficiaries from these benefits, as trust funds could be counted as beneficiaries’ assets.

The SEC further alleges that Anthony Prieto, Jason Lazarus, and Synergy did not inform beneficiaries that their money was being invested in a class of mutual fund that would cost double the fees that the defendants claimed beneficiaries would pay.

Additionally, the SEC alleges that Anthony Prieto and the other defendants not only misrepresented the for-profit nature of their operation to beneficiaries, but also to the Internal Revenue Service and the Social Security Administration through emails, firm brochures, marketing materials, trust documents and operating agreements, and other documents.

Alleged Misappropriation of Funds

Further, the complaint alleges that Anthony Prieto, Jason Lazarus, and Synergy diverted all trustee fees from beneficiaries’ accounts to Synergy. They allegedly used funds from deceased beneficiaries’ accounts to reimburse themselves for employee salaries and other expenses, as well as donating to trial lawyers’ and other organizations.

The SEC alleges that these actions contradicted and violated their claims to the IRS and beneficiaries that they would “only use such funds to further the trusts’ mission to help the disabled.”

In total, the SEC alleges that Anthony Prieto violated the followings regulations:

  • Sections 5(a), 5(c), 17(a)(1), 17 (a)(2), and 17 (a)(3) of the Securities Act of 1933
  • Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a), 10b-5(b), and 10b-5(c) thereunder
  • Sections 206(1), 206(2), 206(4), and Rule 206(4)-8 of the Investment Advisers Act of 1940

This regulatory action remains pending.

Securities Act of 1933

Sections 5(a) and 5(c) prohibit the purchase or sale of unregistered securities. Charitable organizations can qualify for exemptions from this rule.

Sections 17(a)(1)-17(a)(3) prohibit the use of fraudulent schemes and devices, including omission of material information and other forms of deceit, to sell securities.

Securities Exchange Act of 1934

Section 10b-5 prohibits the use of manipulative or deceptive practices, including misrepresentation or omission of information, to defraud customers in connection with the purchase or sale of securities.

Investment Advisers Act of 1940

Section 206 of the Investment Advisers Act of 1940 also prohibits fraudulent and deceitful behavior. It also requires brokers to disclose their role in a transaction to their client before execution and obtain their client’s consent.

Rule 206(4)-8 regulates pooled investment vehicles by prohibiting the making of untrue statements or omissions of material facts to current and prospective investors.

Background Information

Anthony Prieto has passed the following exams:

  • Series 63 – Uniform Securities Agent State Law Examination
  • SIE – Securities Industry Essentials Examination
  • Series 6 – Investment Company Products/Variable Contracts Representative Examination

He has also worked for the following firms:

  • Royal Alliance Associates (CRD#:23131)
  • Signator Investors (CRD#:468)
  • Signator Financial Services  (CRD#:19061)
  • First Allied Securities (CRD#:32444)
  • Conseco Securities (CRD#:29367)
  • Conseco Financial Services (CRD#:629)
  • Conseco Equity Sales (CRD#:4125)

Kurta Law Can Help

If you worked with Anthony Prieto and you have concerns about your investments, please contact us today at 877-600-0098 or for a free consultation.

For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.