Many investors are unaware of the legal recourse available to them after losing money due to securities broker fraud and/or negligence. The truth is that investors who have lost money in this fashion may actually be entitled to damages. The law firm of Oakes & Fosher is interested in hearing from investors who believe this may be them.

Oakes & Fosher is presently investigating former securities broker John Ernst. According to his publicly available FINRA BrokerCheck report, John Ernst became involved in selling an undisclosed private security that was part of the Woodbridge Group of Companies.

John Ernst was a California based securities broker. He worked in the securities industry for twenty-eight years. During his career, he was registered with eight different securities firms.

His Registrations

  • The Prudential Insurance Company of America (1989-1992)
  • Pruco Securities Corporation (1989-1992)
  • John Hancock Distributors (1992-1994)
  • Guardian Investor Services Corporation (1994-1997)
  • SunAmerica Securities (1997-2001)
  • MTL Equity Products (2002-2006)
  • ING Financial Partners (2007-2010)
  • Foresters Equity Services (2011-2018)

The Allegations

Woodbridge was a non-traded REIT, or Real Estate Investment Trust, that spent five years operating as a massive billion dollar Ponzi scheme. Hundreds of securities brokers, like John Ernst, sold promissory notes to their customers with the promise that they were backed up by mortgages. However, the funds that Woodbridge received from investors was rarely issues to lenders as mortgages.

In order to get individuals to invest, brokers like John Ernst promised them annual interest rates of 5 to 8 percent that would be paid out as monthly dividends. Since Woodbridge was not generating any profit from issuing mortgages like it promised, it simply paid its monthly dividends through money coming in through new investors. This continued until the entire thing collapsed and Woodbridge filed for bankruptcy.

John Ernst allegedly sold these Woodbridge promissory notes to four investors, three of whom were customers of Foresters Equity Services. He did this without approval or consent from the member firm. He generated over $35,000 in commissions for himself after executing the transactions.

Due to these above mentioned allegations, John Ernst was barred by the State of Wisconsin from acting as a securities broker in any fashion for a period of thirty-six months. He was also forced to pay $13,824 in disgorgement. He was also suspended by FINRA for a period of nine months and forced to pay $5,000 in fees and $22,752 in disgorgement.

Ponzi Schemes

A Ponzi scheme is a fraudulent investment scheme instituted by a securities broker, or group of brokers. It begins by an individual soliciting funds from investors. The investors have usually been given a clear plan of how their money is going to be invested. However, instead of investing the funds as they claimed they would, the securities broker, or group of brokers, will divert the funds somewhere else. To give the appearence that the invested funds are generating growth, the perpetrating party will provide investors with falsified information about how their investment is doing.

However, in order to pay promised dividends, or to buy out investors looking to liquidate their shares, money needs to be coming in from somewhere. Thus, the perpetrating party will solicit funds from a new round of investors in order to pay proceeds to the earlier ones. This cycle continues until the entire operation collapses–as it did for Woodbridge.

Oakes & Fosher Can Help

Oakes & Fosher dedicates its entire legal practice to helping investors across the nation. If you, or someone you know, have lost money investing with John Ernst, or with the Woodbridge Group of Companies, please contact Oakes & Fosher for a free and private consultation.