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Regulatory Sanctions

Broker-Dealer and 2 Executives Found Guilty of Fraud by Federal Jury

May 16, 2019

by Howard Haykin



A Manhattan jury in federal court returned guilty verdicts against a brokerage firm [Portfolio Advisors Alliance Inc. (“PAA”)] and 2 of its executives [Howard Allen and Kerri Wasserman] in connection with a private placement offering by American Growth Funding II LLC (“AGF II”). The case was brought by the SEC.
Earlier this year, the SEC obtained a final consent judgment against AGF II and its owner, Ralph Johnson, on charges they lied to investors who purchased AGF II’s high-yield securities.



ACCORDING TO THE SEC … between 2011 and 2013, AGF II, which raised capital from investors to provide loans to businesses, and its owner, Ralph Johnson, promised investors 12% annual returns and falsely claimed in offering documents that its financial statements were being audited each year. AGF II also misrepresented in its offering documents about its management and concealed details about deteriorating loan values that could imperil full payment of the promised returns to investors. [See SEC Litigation Release]


PAA, Allen, and Wasserman were charged by the SEC with knowing that the offering documents were inaccurate. They nonetheless continued using them to solicit sales of AGF II securities. Based on the evidenced presented, the jury found PAA, Allen and Wasserman liable on all counts, finding …


  • That all 3 defendants ... violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder;
  • That Allen and Wasserman ... aided and abetted PAA’s violations of those antifraud provisions;
  • That Wasserman ... aided and abetted Allen’s violations of those antifraud provisions.
  • That Allen and Wasserman ... were liable as control persons under Section 20(a) of the Exchange Act for PAA’s violations.



THE PLAYERS.    Portfolio Advisors Alliance LLC, a FINRA member since 2000, is based in New York, NY. Howard Allen, the indirect owner of PAA, has 28 years’ experience. Kerri Wasserman, the President and CCO of PPA, has 25 years’ experience.