HFP Capital Markets under investigation for Fraud as the CEO Geoffrey Byruch faces $350,000 in tax liens New York New York

Boutique investment bank has come under investigation by FINRA for alleged fraud involving their role in a failed private placement Metals, Milling and Mining (MMM).  FINRA has filed a Wells notice against HFP Capital Markets based off of the head investment banker Thomas Mikolasko’s Order Accepting Offer of Settlement.  FINRA is reportedly looking for HFP Capital to refund their customers $3 million involved in the alleged fraud.  More trouble has mounted for HFP Capital as within the past two weeks more than 75% of the employees of the firm have left the job amidst concerns about current CEO Geoffrey Byruch.  In addition to being served with a judgment for $350,000 in unpaid taxes, Byruch has been suspected in recent weeks by employees of the firm of abusing corporate funds to support his personal debts.

In 2009 HFP Capital and Byruch, with Mikolasko as the investment banker, sold Zero Coupon Notes to 58 customers and raised $3 million.  These notes defaulted and investors were not repaid that principal or a promised 100% return.  HFP, Byruch and Mikolasko made significant misrepresentations and omissions to their retail sales force and subsequently to their clients.  HFP and Byruch failed to disclose that their CEO at the time Vincent Puma had a 20% interest in MMM, as well as significantly inflated the value of the asset that this Note was backed by.  In addition to that a $272,000 personal loan was taken from the $3 million and was never repaid.  All of this has led to 58 customers being losing $3 million and now FINRA is stepping in to investigate and they want blood.  Vincent Puma left the firm in 2011, and Geoffrey Byruch, Vince’s 50% partner at HFP and two firms before that assumed full control of HFP.

Unfortunately for Byruch and HFP Capital these are not the only issues to deal with.  On October 17^th about 60 employees of HFP Capital left the firm after the FINRA investigation and Mikolasko’s confession came to light.  According to FINRA, HFP Capital is now left with 18 employees; only about 10 of them holding securities licenses.  What has come out has been a messy fight between Byruch, HFP and the ex-brokers.  While many of the brokers who had left had been recruited by HFP and brought existing clients into the firm, Byruch had filed a temporary restraining order against these brokers claiming that the clients were HFP’s property.  HFP subsequently lost their case in the Supreme Court in New York, however that has not stopped HFP from trying to hijack their ex-brokers’ business.

On the week of October 17^th HFP registered 4 brokers; Anthony Cairo, Marc Helman, Wilbur Inscho, and Timothy Regan, in order to contact clients and disparage their previous broker in order to maintain the account at HFP Capital.  None of these brokers have retail experience including Regan and Helman who only obtained their Series 7 licenses within the past 2 years.  According to their linkedin profiles all of these four men were working in the banking side of HFP and not involved in anything to do with wealth management.  In addition to that Geoffrey Byruch brought his brother Ben Byruch into the company to contact investors.  Ben Byruch as of Octobert 16^th was not registered in the securities industry and working as a chef at a restaurant in New York called Pig and Khao.  After being pulled out of the kitchen, at least two HFP Capital clients have accused Ben Byruch over the past couple of weeks of making unauthorized trades as well as making severe misrepresentations about their broker’s departure from the company. 

This series of events has capped off a rough few months for Geoffrey Byruch.  According to beenverified.com, on May 7^th 2013 the Richmond County Clerk filed a state tax warrant against Geoffrey Byruch for $345,829 that is owed to the state of New York.  Geoffrey, as well as his brother Ben has both been the subject of numbers tax issues and liens filed against them.  The two collaborated on a failed restaurant in 2008 in Philadelphia that resulted in hundreds of thousands of dollars of losses for the two men. 

There has also been speculation of misuse of funds of Byruch and HFP Capital.  One week prior to 60 people leaving HFP, one of the top investment advisors at the firm uncovered a $23,000 advance to Mr. Byruch’s assistant out of the firm’s cash.  The advance was especially concerning as HFP Capital owes investors of a loan issued out by them $1.5 million.  It is believed that there are several more instances of advances as well as personal expenses taken out by Byruch over the past few months with no intention of repaying them back.  Upon discovery Geoffrey Byruch refused to open up the books and reacted very angrily.

All of this paints a picture of a firm in trouble and investors need to be weary given all these charges.  With a pending $3 million lawsuit and a firm strung together with a small inexperienced staff allegedly trying to use boiler room tactics trying to generate revenue things are not looking up for Geoffrey Byruch.  Investors at HFP Capital will have to remain weary of a rogue CEO with a checkered past and severe tax issues who would seemingly do anything to get above water.