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Promissory Notes

Promissory notes are legal instruments where one party, the issuer, promises to pay a sum of money to another party, the payee, either at a fixed time or at the demand of the payee. The company also promises to pay the investor a fixed return on his or her investment, typically principal plus annual interest. While promissory notes can be legitimate investments, many that are marketed to individual investors often turn out to be scams. The Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and the U.S. Department of the Treasury (Treasury) have all expressed their significant misgivings concerning these investments and warn investors to proceed with extreme caution. Promissory notes are often extremely risky investments and investors who are sold promissory notes often suffer a complete loss of their principal investment.

Many promissory notes are subject to and often fail to meet the Securities and Exchange Commission’s registration requirements under Regulation D and individual state registration requirements. Some promissory note issuers may use some of the proceeds to support a "Ponzi" scheme in which money coming in from the sale of new notes pays the interest on older notes. In a typical promissory note Ponzi scheme, fraudsters try to avoid repaying investors' principal by offering to "roll-over" their promissory notes upon maturity. In addition, investors are often lured into these investment schemes by representations that the notes are secured by real estate, US Treasuries, CDs, brokerage firms, or some other businesses assets.

Our firm has explored many promissory note schemes that fit these general scheme patterns including:

  • SEC v. Jerry Cicolani and Jeffrey Gainer, et al – SEC filed a complaint against Thomas Abdallah, Kenneth Grant and their company KGTA Petroleum, Ltd. (KGTA), Jerry Cicolani, and Jeffrey Gainer alleging that KGTA raised at least $20.73 million from investors and that the KGTA oil business was a sham and part of a Ponzi scheme.
  • FINRA v. Success Trade - Success Trade and its CEO and President Fuad Ahmed were accused of improperly selling $18 million worth promissory notes. The promissory notes were issued to 58 investors and were sold primarily to NFL or NBA sports athletes.
  • FINRA v. Howard Allen, et al, - Brokers Howard Allen, Joseph McGowan, and Peter Pak settled charges brought by FINRA concerning allegations that the brokers participated in the issuance of ten promissory notes totaling $1.2 million to seven investors.
  • FINRA v. David Diehl - Allegations were made that Diehl raised approximately $480,000 from seven investors for a business which owned and operated three hamburger restaurants in the St. Louis, Missouri area through the issuance of promissory notes.

Many investors who discover that they have been deceived send complaints to their state attorney general, the SEC, or the FINRA hoping that these agencies will force the broker to return their investment. However, securities regulators, in the vast majority of cases, do not return money to defrauded investors.

Often times the only avenue for financial relief is a private action initiated by the investor with the help of a trained securities attorney. The attorneys at Gana Weinstein LLP can help you evaluate your promissory note case and determine if avenues of recovery exist.

Client Reviews
Thank you Adam and all your colleagues for the professionalism and diligence in the final settlement of our securities fraud case. When a past law firm group turned our case down, you and your firm took on the case and we thank you for the great outcome. We would highly recommend your firm. Gloria K.
I will never forget how much you helped me by winning my case! I never thought I would see any money from my investment. I admire the way you fight for everyday people against big companies. Thank you so much! Myra W.
Adam is an outstanding lawyer. I have worked on several cases with Adam and look forward to working with him again in the future. Rob D. - Co-Counsel.
If you want an attorney that is easy to talk to and genuinely cares about your legal situation, contact Adam Gana. He helped me settle a difficult contract dispute. When you work with Adam, he makes you feel as if you are his top priority. He will call you regularly to stay on top of the situation and submits all necessary legal documentation in a timely manner. His writing is excellent, his demeanor professional, and his work exceptional. Nancy N.
Adam helped me recover money from my broker when I thought all was lost. My house was about to be foreclosed, and I lost everything. Adam came in and saved my life. Jean C.