On March 22, 2013, the Securities and Exchange Commission (“SEC”) charged the broker-dealer John Thomas Financial (“John Thomas”), Anastasios “Tommy” Belesis (“Belesis”), the owner of the broker-dealer John Thomas, and George R. Jaresky Jr. (“Jaresky”), a Houston, Texas hedge fund manager, with defrauding investors. According to the SEC’s Order Instituting Administrative and Cease-And-Desist Proceedings (“SEC Order”), Jaresky worked closely with Belesis to start two hedge funds known as the John Thomas Bridge and Opportunity Fund LP I and the John Thomas Bridge and Opportunity Fund II, which ultimately raised $30 million from investors. The hedge funds invested in bridge loans to start-up companies, equity investments in mostly microcap companies and life settlement policies. The SEC Order alleges that although Jaresky informed investors that he was solely responsible for investment decisions, Belesis also directed some investments from the hedge funds into a company in which John Thomas had close business and personal relationships. Additionally, according to a statement made by the SEC to the media, Belesis “also bullied Jaresky into showering excessive fees on John Thomas Financial, even in instances where the firm had done virtually nothing to earn them.” Indeed, the SEC Order alleged that Jaresky inflated the hedge funds’ valuations in order to increase the fees he collected, and then diverted a substantial portion of those fees to John Thomas. Andrew M. Calamari, the Director of the SEC’s New York office, made the following statement to the media: “Jaresky disregarded the basic standards to which all fund managers are held. Not only did he falsify valuations and deceive investors about the value of their holdings, but he bent over backwards to enrich Belesis at the fund’s expense. Belesis in turn exploited the supposed independence of the funds to surreptitiously pull the strings on key decisions.”
Lax & Neville LLP effectively assists investors, on both a regional and national level, that may have suffered losses as a result of their broker and broker dealer’s sales practice abuses, including fraud. Indeed, we are currently prosecuting a case against John Thomas, and its owners, including, but not limited to Belesis, for sales practice violations, including churning. Furthermore, Lax & Neville LLP has also nationally represented small broker-dealers, financial services professionals and securities industry companies in regulatory matters, including regulatory enforcement proceedings, and securities-related and commercial litigation. Please contact our team of attorneys for a consultation at (212) 696-1999.