RIA Compliance Blog
On December 13, 2016, the Arizona Court of Appeals (“Court of Appeals”) affirmed an Arizona Superior Court’s decision finding that Patrick Shudak, an investment adviser, violated the Arizona Securities Act by acting as an unregistered securities salesperson or dealer in connection with the sale of interests in a real estate venture.
From January 2008 through July 2009, Shudak sold membership units in a company known as Parker Skylar & Associates, LLC (PSA). Neither Shudak nor PSA was registered as a securities salesperson or dealer under the Arizona Securities Act. Shudak stated in PSA’s promotional materials that the money invested in PSA would “be used to purchase and develop real property.” In reality, however, Shudak placed the money that investors put into PSA into his personal account, the personal accounts of others such as his girlfriend, and business accounts of other business that Shudak owned or had some affiliation with.
In December 2009, investors started to grow worried when Shudak stopped returning phone calls and replying to the investors’ demands for information. As a result, Shudak was obligated to stop serving as PSA manager and to give up his PSA membership. He subsequently filed for bankruptcy in April 2010.