Unregistered Securities Broker Sentenced to Jail for Securities Fraud

BALTIMORE, MD ( August 28, 2009) - Attorney General Douglas F. Gansler announced today that former securities broker Alvin Allister Ambrose, 37, formerly residing at 5617 Broadwater Road in Clarksville, was sentenced by Howard County Circuit Court Judge Timothy J. McCrone to eight years in prison with all but six months suspended. Judge McCrone also sentenced Ambrose to pay $602,790 in restitution to investors harmed by his crimes.

Today’s sentencing follows Ambrose’s conviction on June 28th of securities fraud and fraudulent misappropriation by a fiduciary. The charges arose from the defendant’s misuse of over $5,000,000 in investment funds solicited from investors to provide “payday” loans to clients with high rates of return to the investors. “Payday” loans are small, short-term loans that a borrower uses to cover expenses until the next payday.

The investigation revealed that as the owner and operator of First Cash Express, Inc., Ambrose advertised the company as an entity that pools investment funds to provide payday loans to clients of the “cash advance” business. Ambrose offered new investors a return of 15% a month on a minimum investment of $20,000 and assured prospective investors that the investment opportunity was legal and safe.

The State identified over 180 investors who invested approximately $5,040,990 in the payday program. However, Ambrose’s investment offering was not a registered security in Maryland or elsewhere, and neither Ambrose or his business is a registered securities broker-dealer or licensed to offer consumer loans. Ambrose did not establish an escrow account for the funds he received, but instead comingled the funds with his own business and personal funds.

After the Attorney General’s Securities Division was alerted to the scheme, over $3,250,000 in investment funds were found in Ambrose’s business account. Ambrose’s counsel assisted the Securities Division in taking possession of those funds and returning it to investors. The State determined that out of $5,040,990 solicited by Ambrose, he invested only $261,932 in payday loans. He returned only $769,150 to investors and those funds were not the promised interest payments, but were paid from the funds of subsequent investors.

By the State’s most conservative findings, Ambrose used $609,792 of investors’ money for his personal benefit, spending the funds on his house, his real estate speculation business, a Caribbean cruise, diamond rings, furniture and his wife’s law school tuition.

Today’s sentencing concludes a multiple-agency investigation performed by the Criminal Division and Securities Division of the Attorney General’s Office, with support from the Maryland State Police. In making today’s announcement, Attorney General Gansler thanked Assistant Attorney General Kate O’Donnell for her work on the case.