Investigation: Customer Complaints at Geneos Wealth Management

Our law office is investigating customer complaints against Colorado based broker-dealer Genos Wealth Management.  If you lost money investing with them or have a complaint regarding the handling of your Geneos Wealth Management account, please call us at 212-203-9300 to speak to an attorney for free. We have experience handling claims related to non-traded REITs, variable annuities, private investments, ponzi schemes and other types of financial mismanagement or investment fraud.

Complaint: Geneos Advisor Ran Ponzi Scheme

In 2020, former Geneos Wealth Management advisor Bradley Tennison pleaded guilty to the sale of unregistered securities to nine investors between October 2015 and September 2016. He told investors the securities were in an entity called The Joseph Project, “a supposed religious and humanitarian project for which Tennison served as the general manager,” according to the Securities and Exchange Commission. He also erroneously represented to his investors that their money “would be invested with banks that would use the investment proceeds for after-hours trading to generate returns,” assuring them the securities were “100% safe” and that their funds would be dedicated towards humanitarian causes.

As the Arizona Corporate Commission would later find, “most of the investor funds were misappropriated.” Despite Tennison’s assurance that investors would get their principal back after one year, “none of the investors have received their promised returns.” Tennison was eventually indicted on 16 felony counts and pleaded guilty to the attempted sale of unregistered securities. An Arizona court ordered him to serve three years of supervised probation and to pay $8,185,000 in restitution. The Arizona Corporate Commission, meanwhile, revoked his securities registrations and ordered him to pay a penalty of $75,000. He was also barred by both the SEC and the Financial Industry Regulatory Authority.

Bradley Tennison’s FINRA-maintained BrokerCheck report reflects a litany of customer complaints against him, five concerning his recommendations of The Joseph Project. As his BrokerCheck report also reflects, it was a customer complaint about The Joseph Project that led to his termination from Geneos Wealth Management in April 2018.

Complaint: Fraud and Conflicts of Interest at Geneos

When Peter Izmirian and Sandra Ingwaldson filed an arbitration claim alleging that Geneos Wealth Management failed to supervise Mark David Holt, a broker disbarred and later imprisoned for defrauding his customers from 2005 to 2014, the firm settled with them privately for an undisclosed amount, according to a 2017 report by InvestmentNews. The elderly investors—whose lawyers said Holt “stole all their money”—eventually obtained an award of $477,000 against Holt, who was serving a ten-year prison sentence.

Holt had pleaded guilty in 2014 to the theft of at least $4 million “from his mostly retired clientele,” according to the Star Tribune, in a scheme that began in 2005. He spent his victims’ money on his lavish personal expenses, prosecutors alleged, such as a yacht club membership, fancy cars, expensive hotel stays, and even “horse boarding.” In a statement at his sentencing hearing, one of his victims said: “I’d never felt so betrayed, our trust so violated as when the FBI showed up on our doorstep and told us we had lost a significant portion of our hard earned retirement… What you did shook us to the core. We won’t have the future we planned, but you will not defeat us.”

Sales of GPB Ponzi Scheme

In 2019 Geneos Wealth Management was named as a defendant, alongside many other broker-dealer firms, in a class-action lawsuit alleging it improperly sold securities in GPB Capital, a purported alternative asset management firm later exposed as a massive Ponzi scheme. As CNN reported in February, more than 17,000 retail investors were allegedly defrauded by GPB Capital, which used investor funds to pay distributions to other investors, rather than funds generated by its investments. In classic Ponzi scheme fashion, according to SEC charges, GPB’s leadership also allegedly “manipulated the financial statements of certain limited partnership funds” to falsely create the appearance that the funds generated more income than they did in reality.

A lawsuit filed by New York Attorney General Letitia James alleged that GPB Capital ultimately defrauded investors of more than $700 million, and that its leadership was aware of cash flow issues in its portfolio companies. Investors entrusted GPB Capital with more than $1.8 billion, according to the lawsuit, which were “spent to subsidize private planes and luxury travel” and on payments worth “millions of dollars” to the executives’ personal bank accounts and those of their family members. The firm’s founder, David Gentile, used investor funds to purchase “a Ferrari sports car,” James alleged.

The class-action lawsuit alleges that Geneos Wealth Management and other broker-dealer firms “engaged in a massive unregistered public offering” and should have known that GPB Capital was violating federal disclosure requirements. Brokers who sold GPB investments, it charges, were “paid grossly excessive commissions” of about 11%, effectively bribing them “to look the other way and to perpetuate the scheme by failing to disclose that their clients’ investments were being used to pay distributions.” Geneos and other brokers allegedly knew or were reckless in disregarding signs red flags indicating that GPB Capital was engaged in fraudulent conduct. Filed in Austin, Texas, it seeks to recover unspecified damages for the Ponzi scheme’s victims.

SEC Charges Geneos over Conflicts of Interest

A 2018 Securities and Exchange Commission order found that Geneos Wealth Management failed to disclose conflicts of interests to customers and violated its duty to seek best execution when it invested customers in certain mutual fund share classes when less expensive share classes of the same products were available to them. According to the SEC’s charges, Geneos “financially benefited” from its recommendations of mutual fund share classes that charged 12b-1 fees, receiving at least $1.04 million in such fees when lower-cost funds were available.

The firm also allegedly did not disclose to customers that two of its third-party clearing brokers shared revenues they received from certain mutual funds in their no-transaction-fee mutual fund programs, creating a conflict of interest that incentivized Geneos to “favor” those funds when recommending investments to its clients.

“These disclosure failures cause real harm to clients,” an SEC enforcement chief said in a statement about the action, which ordered Geneos to pay a $1,558,121 in disgorgement and prejudgment interest, plus a penalty of $250,000.

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