October 20, 2020
On September 9, 2020, former general securities representative Tony Kassaei consented to a bar from associating with member firms registered with the Financial Industry Regulatory Authority (FINRA) in all capacities for refusing to provide on-the-record testimony and produce documents and information as requested pursuant to FINRA 8210.
Kassaei was most recently associated with Centaurus Financial, Inc. in Irvine, California from October 2015 to March 2019. He has been associated with two other firms in Irvine within the last ten years: Summit Brokerage Services, Inc. from September 2015 to October 2015 and J.P. Turner & Company, L.L.C. from August 2009 to October 2015. According to his FINRA BrokerCheck report, Kassaei has one customer dispute that alleged unsuitable recommendations, misrepresentation, negligence, fraud, and breach of fiduciary duty that settled for $84,000. His record also shows two tax liens totaling over $75,000.
His most recent regulatory disclosure arises from a Letter of Acceptance, Waiver and Consent (AWC) approved by FINRA on September 22, 2020 relating to the entry of findings that Kassaei participated in undisclosed and unapproved private securities transactions involving 11 firm customers who invested at least $2.6 million in real estate businesses. These securities were sold in the form of promissory notes issued by entities owned by Francisco Esparza, Kassaei’s former colleague at J.P. Turner. According to the AWC, Kassaei not only solicited these promissory notes to investors but also helped actively facilitate the investments by helping investors establish accounts at self-directed IRA firms to hold the investments, helping transfer investor funds for the promissory notes, and obtaining investors’ signatures on investment documents, among other things. Esparza compensated Kassaei for this activity, including at least $125,000 for the solicitation of the 11 firm customers who invested in the real estate business.
Esparza pled guilty to wire fraud and admitted that the real estate business investment was a Ponzi scheme, which caused investors to lose approximately $12 million between 2009 and 2016. The 11 investors connected to Kassaei’s involvement lost at least $1.3 million on investment in this Ponzi scheme. Esparza was sentenced to 78 months in prison.
During this time, Kassaei never provided written or oral notice to J.P. Turner describing the private securities transactions, his role in the transaction, or whether he had received or anticipated receiving compensation in connection with the transaction, in violation of NASD Rule 3040 and FINRA Rule 2010. Further, when FINRA began investigating his involvement in the real estate Ponzi scheme, Kassaei initially appeared for testimony but ultimately refused to answer the staff’s questions. Kassaei also refused to provide complete on-the-record testimony and produce documents and information as requested by FINRA staff, in violation of FINRA Rules 8210 and 2010.
By signing the AWC, Tony Kassaei resolved the allegations made against him, without admitting or denying any wrongdoing. Kassaei consented to a bar from associating with any FINRA member firm in any and all capacities.