It seems GunnAllen has another embarrassment on its hands: Seven investors who say they were the victims of a Ponzi scheme by Frank Bluestein, a former GunnAllen rep, have filed an arbitration claim against the Tampa firm.
Bluestein’s association with Maximum Financial and b/d GunnAllen ended in October after being terminated by GunnAllen for selling unregistered securities. Bluestein is the object of extensive Detroit-area media coverage, and is being investigated by Michigan state securities regulators and the SEC. Apparently, after GunnAllen, Bluestein moved down the street where, according to a Detroit Fox News affiliate, he set up shop under the name “Frank Julian,” as a member of the “research team” at a company called Freedom Road, which claims to be in the business of “stock selection and market education.”
Bluestein was also allegedly involved in a fraudulent scheme to entice his clients to invest with Detroit-area resident Edward May, and May’s firm E-M Management Co. LLC. The SEC filed a lawsuit against May, and his firm, on November 20, charging him with defrauding $250 million from as many as 1,200 investors between 1998 and July 2007. May was selling shares of limited-liability companies, which he claimed had received revenues from telecommunication contracts (allegedly phony) with Las Vegas hotels, casino and resorts.
“Nobody is accusing GunnAllen of running a crooked business—indeed, the company says it goes to great lengths to investigate the nature of customer complaints, and to eliminate the truly bad eggs. And, today, the firm no longer hires reps with more than three marks—no matter the circumstances,” says founder Richard Allen Frueh (pronounced “free”). But the number of marked up reps still at the firm—and the notoriety of one of the firm's top producers, who has a whopping 24 hits on his U4—still raises questions,” as Registered Rep. reported in a 2005 story, Growth at a Price.