Questar Capital accused of complicity in May scam
By Bruce Kelly
April 22, 2008
Top executives and employees of Questar Capital Corp. were well aware that a broker was selling unregistered investments created by Ed May LLCs, according to a filing by an ex-Questar broker in an ongoing arbitration case before the Financial Industry Regulatory Authority.
Those investments wound up being phonies and costing investors millions in losses, according to the Securities and Exchange Commission.
Based on that allegation, many investors plan to amend their complaints to include Questar of Minneapolis, where the broker, Frank Bluestein, was affiliated from 2000 to 2005.
After that, he joined GunnAllen Financial of Tampa, Fla., which had been the lone broker-dealer named in many of the investors’ arbitration complaints before the Financial Industry Regulatory Authority.
“Apparently, Questar knew all about Ed May, and did nothing about it, according to Mr. Bluestein,” said Joseph Spiegel, an attorney based in Ann Arbor, Mich.
In all, he said he intends to amend about 70 complaints from investors to now include Questar.
In total, he represents clients looking for arbitration awards between $8 million and $9 million.
In November, the Securities and Exchange Commission charged Mr. May, who worked near Detroit, with committing a massive fraud in the form of an elaborate Ponzi scheme involving as many as 1,200 investors and $250 million.
Mr. Bluestein sold many of the Ed May products, and has maintained he believed the investments were legitimate in a number of statements.
Questar was acquired by Allianz Life Insurance Company of North America in 2005.
“Although the events in question occurred before we purchased Questar, we believe Questar acted appropriately,” said Hubertus Kuelps spokesman for Allianz of America, in an e-mail.
Questar recently took action against one of the executives Mr. Bluestein named in the filing, which was a response earlier this month to various claims made against him by Questar in an arbitration proceeding over the alleged fraud.
In January, Questar fired Jason Kavanaugh, senior vice president of mergers and acquisitions, for failing ``to disclose private securities transactions and outside business activities,'' according to Finra's public records.
Mr. Kavanaugh and Scott Chimner, also a Questar principal, “were aware of the sales of Ed May LLCs”, the filing stated.
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