• August 8, 2024
• Jared Eakes

Missing bank statements. Unreturned phone calls. Suspicious or numerous transactions. All of these are common warning signs of stockbroker fraud, a kind of investment fraud that costs investors millions of dollars each year. The Jared Eakes investment scam is just the latest in a long list of fraud schemes to be on the lookout for.

Many of these schemes take investors off guard, precisely because they prey upon the areas of financial planning that you would normally rely upon a professional to handle. Working with an investment loss lawyer is the best way to reclaim control. The broker fraud attorneys at Wolper Law Firm, P.A. are experienced advocates for investors who have been scammed by someone that they trusted with their financial interests. If the Jared Eakes story sounds like something that may be happening to you, contact one of our broker fraud lawyers today to take back the reins of your finances.

Who is Jared Eakes?

Jared Eakes, CRD #6618313 was a formerly registered investment advisor and broker with Merrill Lynch. He then started his own company, GraySail Advisors. He worked in Jacksonville, Florida since 2016, although he was only registered with FINRA as a Merrill Lynch advisor up through 2018. He has since been charged with defrauding over $2.7 million from 17 clients across the southern United States.

Jared Eakes was missing for two years after an initial 2022 complaint against him alleged that he had misused client money in order to pay down his own student loans and miscellaneous debts. He was also accused of wiring $116,000 of client funds to a casino in Las Vegas for his own gambling purposes. He was located by the FBI in May of 2024.

How Did Eakes Defraud Investors?

Eakes’s scam allegedly began after he left Merrill Lynch and launched his own investment firm, GraySail Advisors. GraySail Advisors reportedly only managed $10 in assets. However, Eakes used the company in order to sign a deal in 2019 with an Alabama-based investment advisory business that managed $43 million in investment and retirement accounts for over 43 customers. This process allowed Eakes access to the firm’s clients, some of whom were converted to GraySail accounts.

From there, Eakes filed fake paperwork in order to have payments sent from genuine Individual Retirement Accounts into his business’s bank account. In order to perpetrate the scheme, he:

• Forged promissory notes
• Cut and pasted client signatures in order to misrepresent consent
• Misled clients and investors as to the whereabouts of their funds
• Filed fake paperwork funneling payments into his own business and another business of a friend, Small World Capital LLC
• Falsely represented himself as a registered financial advisor.

What Are the Charges Against Jared Eakes?

The Securities and Exchange Commission (SEC) filed charges in 2022 against Jared Eakes for his fraudulent activities. The indictment demands that Eakes forfeit the $2.7 million he had misappropriated for personal use, as well as pay applicable civil penalties. Eakes is charged with violating the antifraud provisions of Sections 17(a)(1) and (3) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (“Advisers Act”).

Why Did the SEC Charge James Blake Daughtry?

The SEC also charged James Blake Daughtry of Dothan, Alabama for breach of fiduciary duties. He has been barred by the Alabama Securities Commission under Section 8-6-17(a) and (b) relating to fraudulent and deceitful practices. He has also been permanently disbarred from acting as a financial advisor from FINRA.

The scheme was in large part enabled by Daughty’s lack of oversight and care when selling his client accounts to Eakes’ firm GraySail, a firm not registered in Alabama. While Daughtry was allegedly unaware of the scope of the fraud schemes perpetrated by Jared Eakes, he failed to conduct due diligence and protect his clients’ accounts by selling them to Eakes. He also failed to disclose the sale to his clients while receiving substantial compensation from the deal. He did not act in his clients’ interests when presented with complaints and other warning signs that Eakes was a bad actor.

What is an Investment Scam?

Investment scams are attempts to mislead investors as to the financial viability of their accounts and embezzle or otherwise misuse investor funds. Investment scams often look like “too good to be true” opportunities, chances to invest with significant time pressure attached, or other attempts to convince investors to chase good money after bad. Some investment scams involve considerable up front fees with the promise of high returns after a period, which never arrive. Others take advantage of shared cultural, religious, or affinity bonds in order to convince a client to entrust their funds with someone unqualified or unregistered as a financial advisor. Most investment scams rely upon concealing the truth from investors about how their money is actually being used.

Warning Signs of a Bad Financial Advisor

It is crucial to always check on the background of whoever is investing your money for you. You can ask if someone is licensed to sell a security or investment, and research their credentials yourself online with FINRA BrokerCheck. Bad Florida brokers like Eakes rely upon their clients and even other financial professionals not performing due diligence about their credibility.

Not all securities must be registered with the SEC. Municipal, state and federal bonds, as well as some microcap stocks are exceptions. However, checking on your broker’s background can save you thousands to millions of dollars in the event that they have already had a complaint filed against them.

How Do I Know If an Investment Company is Legitimate?

Many investment fraud scams also attempt to create a sense of urgency or scarcity around the opportunity. Investment fraudsters might tell you that there are limited spots left to invest, offer a “one day only” deal, or claim to have special experience or insight that others can’t match. Always ask questions, conduct your own research, and check the background of your financial advisor before you give them money. When in doubt, wait to invest or simply say no.

What Constitutes a Breach of Fiduciary Duty?

Fiduciaries are legally bound to act in the best interests of their client. They cannot put their own interests above those of the client. However, not all financial professionals are held to the standard of a fiduciary. It is important to thoroughly review paperwork before you agree to entrust funds to a broker.

Breach of fiduciary duty examples include selling your account to an unregistered party, pocketing profits from a deal that was not in your favor, or making sloppy errors in their accounting or trades. In the event that your fiduciary agent acts in a way that is not in your best interests or prioritizes another party’s interests they may be held accountable by law. Suing for breach of fiduciary duty with a qualified broker fraud attorney can help you recover lost funds as well as win additional breach of fiduciary duty penalties for the harm done.

Can You Get Money Back From Fraud?

Recovering defrauded funds is possible with the help of a FINRA complaint. You can report the fraud to law enforcement, federal and state regulators, as well as an investment fraud attorney. The latter can help you build up your case file, submit your complaint, and arbitrate or mediate your FINRA claim. In some cases, you may also be able to file a lawsuit in order to aid in recovery.

How Long Does It Take to Get Fraud Money Back?

Arbitration is often faster, cheaper, and less formal than going to court after an investment loss caused by fraud. However, recovery is not guaranteed and may still take time. You may need several months in order to complete the entire process of arbitration or mediation. Follow up within 30 days with law enforcement and any other regulators as soon as you file your claim.

Can an Investment Fraud Attorney Help Get My Money Back?

Report fraud as soon as you become aware that something is not right in your accounts, and keep records of communications and statements made as far back as possible between you and your financial advisor or brokerage firm. Share these specifics with your investment fraud attorney, who can help you with all of the following areas of your claim:

• Assessing the specifics of your situation: Does your investment firm operate in multiple states? How much of your portfolio do they handle? What kinds of investments are at risk? Your broker fraud lawyer will create a comprehensive assessment of the situation and can handle communications between you and state or federal regulators about the defrauded funds.
• Conducting a proper background research: Has your broker already appeared on a known investment scammer list? Are there additional parties who may be involved in your claim? Many scam artists have lost or spent the totality of their embezzlement, and cannot always repay every party in full once they are discovered. Our firm can build up the strongest possible case on your behalf, and ensure that when funds are being repaid, your interests receive thorough consideration.
• Determining legal grounds against the responsible party: State and federal regulation may be used in order to not only support your claim for penalty and disgorgement, but also to bar a financial advisor from practicing again.
• Gathering evidence and information to support your claims: Proof of communications and trades may be necessary in order to build up your case. We can advise you about what kinds of evidence will be necessary for your FINRA claim.
• Representing your interests in court and out-of-court proceedings: Our attorneys can represent you not only in court, but also in mediation, arbitration, and other areas of negotiation around your claim.
• Helping you with the final recovery process: Recovery is our goal, and we conduct every step possible to help you regain your investment. We aim to set every one of our clients on a better financial path moving forwards.

Do You Suspect Investment Fraud? Speak to an Investment Fraud Attorney at Wolper Law Firm For Help

The Jared Eakes investment scam illustrates the necessity of working with a legal professional to ensure that your complaints are heard. Several clients attempted to report Eakes’ behavior in order to salvage their retirement accounts and stop fraud. Unfortunately, their investment advisor refused to speak on their behalf. If you need help protecting your own investments, contact Wolper Law Firm for strong, effective advocacy today.