Financial Adviser Sued Eckert For Being Targeted by SEC
Dean Vagnozzi, a Philadelphia-based financial adviser, sued Eckert Seamans Cherin & Mellott LLC after being targeted by the SEC (Securities Exchange Commission) for investments associated with fraud.
According to Mr. Vagnozzi, Eckert Seaman’s attorney John Pauciulo’s “amateurish” due diligence exposed him to claims from securities regulators and investors after partnering with a cash advance business that faces fraud allegations.
Pauciulo Failed To Conduct Due Diligence on PAR Funding
The financial adviser states that Mr. Pauciulo failed either to uncover or expose the risks of a partnership with PAR Funding. He added that the attorney did not disclose accurate information about the group’s default rate and the criminal history of its founder.
Based on official records, Mr. Vagnozzi partnered with PAR Funding back in August 2016 after meeting its founder, Joe Mack, at a Philadelphia-area golf course. According to the complaint, PAR’s business model revolved around providing rapid financing to small and midsize businesses in exchange for a claim on a piece of their accounts receivable.
Before agreeing to sign on with PAR, Mr. Vagnozzi asked Mr. Pauciulo, with whom he’d worked in different capacities for more than 12 years, to conduct the due diligence on Joe Mack and his business.
But the complaint stated that Mr. Pauciulo failed to disclose that Mr. Mack’s real name was Joseph LaForte and that LaForte had a criminal record.
PAR Declared Post Pandemic That They Will Not Meet Payment To Investors
The complaint also said that Mr. Pauciulo neglected to independently verify PAR’s financial strength, including its underwriting policies, the rate at which the firm’s loans went into default, its number of liens, and more.
After being given the all-clear to conduct business with PAR, records show that Mr. Vagnozzi eventually raised tens of millions of dollars from investors. But after the pandemic struck, PAR declared that it would not meet its payment obligations to investors.
Mr. Vagnozzi later discovered that state and federal securities regulators were investigating him over allegations that he was acting as an unlicensed broker for PAR.
Vagnozzi Settled With The Sec For $600K In Penalties And Restitution
The U.S. Securities and Exchange Commission (SEC) ultimately brought an enforcement action against PAR and its principals, an act that also included Mr. Vagnozzi and his company. The action alleged that funds created by Mr. Pauciulo to funnel investments hadn’t been properly registered and that clients hadn’t been given proper disclosure about the risks of placing their money with PAR.
Mr. Vagnozzi struck a deal with the SEC — making him and his company, A Better Financial Plan Inc., responsible for roughly $600,000 in penalties and restitution.
Mr. Vagnozzi also has been named as a defendant in three class-action lawsuits by investors in Florida, Delaware, and Pennsylvania. One of the suits also includes similar claims against Eckert Seamans and Mr. Pauciulo.
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