The following information is from FINRA’s website under “Disciplinary and Other FINRA Actions, January, 2013.”

Kenneth Andrew Mauchin (CRD #2366345, Registered Principal, Sanford, Florida)

was named a respondent in a FINRA complaint alleging that he misappropriated $23,750 from elderly customers’ accounts by converting their funds to cashier’s checks and depositing those checks into a bank account of an entity he controlled.

FINRA’s complaint alleges that Mauchin did so without the customers’ knowledge or authorization. The complaint also alleges that Mauchin prepared a customer’s application for a variable annuity and falsely listed his bank branch office address as the customer’s mailing address, which he knew to be false.

Also, a customer applied for a premiere select IRA brokerage account with Mauchin’s firm and, without the customer’s knowledge or authorization, he falsely listed his bank branch office address as the customer’s mailing address, which he knew to be false. These applications became part of the firm’s books and records, causing his firm’s books and records to be false.

This complaint further alleges that Mauchin failed to appear for FINRA testimony.
(FINRA Case #2011028452701)

This ends the information from FINRA’s website.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, represents clients nationwide before FINRA. If you or a loved one have sustained investment losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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Securities Lawyer, Lars Soreide, of Soreide Law Group, is currently investigating Gramercy Securities, Inc. This brokerage has been alleged to have placed unsophisticated investors’ money into unsuitable investments. There have been claims, for example, of a recent widow losing her entire net worth by investing in risky private placements. Some of these risky private placements were in the Inland American Real Estate Investment Trust, LaeRoc Edge Funds, and Arciterra Whitefish Opportunity Fund.

LaeRoc funds are real estate private placements. LaeRoc Partners is a real estate investment firm managing over $650 million in assets. The LaeRoc private placement was promoted by brokers as a safe or conservative investment. These representations allegedly were misleading.

Soreide Law Group, PLLC, represents clients nationwide. Call for a free consultation on how to potentially recover your private placement financial losses. To speak with an attorney call 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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Jane E. O’Brien, 59, of Needham, MA, is facing securities fraud for allegedly bilking her client out of $240,000. O’Brien was working for Merrill Lynch in Boston as a financial advisor at the time. O’Brien allegedly told an elderly woman she was investing her money in thousands of shares of a New Hampshire-based company called A.C. Corp. When actually O’Brien was using her client’s money to pay off her own mortgage and settle her legal fees involving a dispute with another client, according to charges filed November 18th., 2012, by federal prosecutors.

This alleged scheme began in 2009, when O’Brien had her client sign a bogus promissory note for $500,000. The client began making payments on the note in late November 2009, prosecutors said. She wrote the checks to a man O’Brien said was an employee at A.C. Corp., but was in reality O’Brien’s husband, the filing said. The husband has not been named and has since separated from O’Brien, according to the filing.

It was reported that after the checks were paid to O’Brien’s husband, he then wrote her checks from the account where the money had been deposited. O’Brien then wired money to her mortgage company to pay her mortgage. Other payments made were used for payment to a law firm representing O’Brien in another dispute with a former client.

Securities Lawyer, Lars Soreide, of Soreide Law Group, has begun an investigation into this matter. If you have invested with Jane E. O’Brien, formerly of Merrill Lynch in Boston, call and speak at no charge to a securities attorney who may potentially help you recover your losses. Call 888-760-6552, or visit http://www.securitieslawyer.com.

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In a recent MoneyWatch article, Steve Vernon writes that investment fraud and financial abuse targeting the elderly is a major problem today, according to a recent survey by the Investor Protection Trust and Investor Protection Institute. The top three ways in which seniors are exploited are:

Theft of diversion of funds or property by caregivers
Financial scams perpetrated by strangers
Theft or diversion of funds or property by family members

The IPT and IPI jointly surveyed a total of 756 experts with such cases, including state securities regulators, financial planners, health care professionals, social workers, adult protective service employees, law enforcement officers, elder-law attorneys and academics. The found the best way to prevent financial abuse — educational campaigns and counseling tailored to the financial needs of older Americans and their families or caregivers.

The MoneyWatch article asks, “How serious is elder abuse?” According to a bulletin from the National Adult Protective Services Association, 1 out of 9 U.S. seniors reported being abused, neglected or exploited in the past 12 months. Victims are three times more likely to die than those not subjected to abuse and four times more likely to go into a nursing home. They also use healthcare services at a higher rate than the general population.

So what can you do both for your parents now and for yourself down the road? Here are some suggestions:

Raise awareness of these issues with your parent(s) by finding one of the programs by experts as effective for prevention. Make it easy for your parents to attend. Make it an opportunity to do something social with your parents.

Put your parents’ finances on auto-pilot, with automatic deposit of Social Security, pension, annuity and investment income into checking accounts. Put as many of their bills as possible electronically. Find a financially savvy, “guardian angel” who will frequently visit or check in with your parents and will supervise any substantial financial transaction. This person will often be a family member, although this step can be a double-edged sword, given the prevalence of abuse by family members cited by the survey. If you don’t have any trustworthy family members living close by, see if you can find a trustworthy friend who lives close by.

If your parent(s) worked for a large, reputable company and have their savings with a 401(k) plan — consider keeping it there. Often you’ll get the best investment deals by keeping your money with your employer’s plan. These plans are strictly regulated, and employers operate these plan for the exclusive benefit of their employees.

A red flag goes up when a senior is isolated and their need for companionship makes them vulnerable to exploitation. This is one important reason why a careful choice of living quarters needs special attention. Arrange for daily contact with people who care about you and your parents/seniors.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, represents clients nationwide in arbitrations before FINRA. Call to speak to an attorney regarding your investment losses. For a free consultation on how to potentially recover those losses call: 888-760-6552, or you may visit our website at: http://www.securitieslawyer.com.

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Stephen Nietsch (CRD #3111082, Registered Representative, Boynton Beach, Florida)

was barred from association with any FINRA member in any capacity and ordered to pay $20,000, plus interest, in restitution to a customer. The sanctions were based on findings that Nietsch borrowed $20,000 from an elderly customer contrary to his member firm’s procedures prohibiting him from borrowing from customers. Nietsch has not repaid the loan.

(FINRA Case #2009020385001)

The above information appears on FINRA’s website under “Disciplinary and Other FINRA Actions, September, 2012.”

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, represents clients nationwide. For a free consultation on how to potentially recover your financial losses call: 888-760-6552, or you may visit our website and complete the online form at: http://www.securitieslawyer.com.

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Florida has determined to fight abuse and exploitation by enacting a specific civil cause of action for exploitation, but the Florida action applies to the exploitation of “vulnerable adults.” As a result, the attorney must be prepared to offer testimony on both prongs of the action and prove that his client is both a “vulnerable adult” and a victim of “exploitation.”

A “vulnerable adult” is defined as a person 18 years of age or older “whose ability to perform the normal activities of daily living, or to provide for his or her own care or protection, is impaired due to mental, emotional, long-term physical, or developmental disability or dysfunctioning, or brain damage, or the infirmities of aging.”

“Exploitation” is defined as obtaining or using, or endeavoring to obtain or use the vulnerable adult’s funds, assets or property for the benefit of someone other than the vulnerable adult by: 1) a person “who stands in a position of trust and confidence with a vulnerable adult,” or 2) by a person who “knows or should know that the vulnerable adult lacks the capacity to consent.

Therefore, in order to take advantage of Florida’s direct civil cause of action, the attorney must first determine whether he representing a “vulnerable adult.” This requires a thorough investigation of the client’s capacity and should begin with an investigation of any previous assessment conducted by health care professionals. If no assessment has yet been performed, and the attorney believes that capacity issues exist, it will be necessary to obtain a professional assessment and be prepared to present evidence through expert testimony that the client is a
“vulnerable adult” as defined by Florida law. In addition, the testimony of family members, care givers, and friends would provide important testimony on this issue.

The next step is to determine if the facts constitute “exploitation” as defined under the statute. Here, the attorney must carefully analyze the relationship that existed between the client and the defendant to determine if a confidential or trusted relationship existed. If a confidential or trusted relationship existed, such as in a fiduciary relationship under a trust, power of attorney or guardianship, the remaining issue would be whether the funds were used for the benefit of someone other than the vulnerable adult. If no confidential or trusted relationship existed, an action may nevertheless be brought under the direct statute if the attorney can prove that the defendant knew or should have known that the client lacked the capacity to consent and thereafter used the funds for the benefit of someone other than the vulnerable adult. Lay testimony, as well as expert testimony from health care professionals, would be appropriate in establishing the lack of capacity to consent, and just as importantly, the red flags of incapacity that should have been evident even to a lay person.

The final question to be answered by the attorney before filing suit is who can bring the action on behalf of the vulnerable adult. Interestingly, the Florida statute provides that an action on behalf of a vulnerable adult who has been abused, neglected or exploited may be brought by the vulnerable adult, the guardian of the adult or a person or organization acting on behalf of the adult with consent. The fact that the cause of action may be brought by the vulnerable adult himself indicates a recognition that the capacity of the vulnerable adult does not have to be so diminished as to first require the appointment of a Guardian.

Additionally, allowing the action to be brought by a person or organization “acting on behalf of the vulnerable adult with the consent of that person,” presents an interesting issue if the attorney is attempting to establish exploitation by proving that the defendant knew or should have known that the vulnerable adult lacked the capacity to consent.

Nevertheless, it is clear that the civil trial attorney in Florida is not required to first establish a guardianship prior to bringing an action under the statute.

With respect to damages, the Florida statute provides that a vulnerable adult who has been abused, neglected or exploited may recover both actual and punitive damages “for any deprivation of or infringement on the rights of a vulnerable adult.” Like California, the prevailing party may be entitled to recover “reasonable attorney’s fees, costs of the action, and damages.”

As discussed above, allowing recovery of attorney fees is an important element of damages for elders who would not be made whole even in victory if contingent attorney fees are taken from the recovery.

In addition to the civil remedies expressed above, Florida statutes also provide elders with civil remedies for financial exploitation which also constitutes a criminal violation. Under this provision, where it is proven by clear and convincing evidence that the elder is a victim of “theft, robbery and crimes related thereto,” a cause of action with damages of “three-fold the actual damages sustained, together with reasonable attorney’s fees and court costs,” is available.

Is it important to note that the definition of “exploitation” within Florida’s civil statute, and the definition of “theft” under its criminal statute, are strikingly similar, yet with one critical difference. While within the definition of each, the offender “obtains or uses or endeavors to obtain or use the property of another for the benefit of someone other than the victim,” in the criminal statute, there is no requirement that the victim be a “vulnerable adult”, so an individual over the age of 65, who would otherwise not be defined as a “vulnerable adult” under the civil statute, may bring a civil action for exploitation under the criminal statute, as long as the facts otherwise meet the definition of “theft.”

The Florida attorney, then, is provided with options in presenting causes of action for the financial exploitation of individuals 65 years of age and older regardless of capacity. Florida also provides that in civil actions in which a party is over the age of 65, he may move the court to advance the trial on the docket. Like California, creating a direct civil cause of action for financial exploitation, and providing civil remedies for criminal violations, Florida has taken important steps in the fight against elder abuse, and has presented the civil trial attorney with effective tools in responding to financial abuse.

This information came from “Litigation Responses to Financial Exploitation” written by Brian H. Fant.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, represents clients nationwide in arbitrations before FINRA. Call to speak to an attorney regarding your investment losses. For a free consultation on how to potentially recover those losses call: 888-760-6552, or you may visit our website at: http://www.securitieslawyer.com.

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Raymond James, FINRA ID # 11-03503 (Bradenton, FL, 8/21/2012)
A split FINRA arbitration panel awarded $985,700, including triple damages, to an elderly customer on his misappropriation claim. This award against Paul David Arnold, and Raymond James and Associates, Inc., of Bradenton, Florida, involved the purchasing of an annuity, electronic transfers and conversion of funds of an elderly person. Some of the charges were: unsuitablity, breach of fiduciary duty, common law conversion/theft, failure to supervise, and exploitation of an elderly person.

The FINRA award states, “exploitation of an elderiy person, Florida Statutes, Sections 825.103(1) and 772.11), Respondent Arnold is liable for $739,320.00 (representing three times the compensatory damages amount of $246,440.00) plus pre-judgment Interest on the compensatory damages amount of $246,440.00 at the Florida statutory rate running from September 12, 2011 through the date of the Award.” Fees were also recovered.

Soreide Law Group, PLLC, represents clients nationwide. Call for a free consultation on how to potentially recover your financial losses. To speak with an attorney call 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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 Joel William Carlson (CRD #2844760, Registered Representative, Vadnais Heights, Minnesota) 

was barred from association with any FINRA member in any capacity. Carlson consented to the described sanction and to the entry of findings that he solicited his member firm’s customers to give him a total of at least $734,000, fraudulently misrepresenting to the customers that he would invest their money safely in securities, but used the money for his own personal use.

The customers gave Carlson personal checks made payable to an entity that he controlled and deposited the customers’ checks in a bank account he controlled in the name of the entity.  Carlson has not re-paid the customers their moneywith the exception of one customer.

FINRA’s findings also stated that the clients who gave Carlson money, were between 68 and 90 years old;  all but one of the investors were retired. 

(FINRA Case #2012031202901)

 This information appeared on FINRA’s website under, “Disciplinary and Other Actions, June, 2012″

If you have sustained investment losses due to your stock broker or financial advisor’s recommendations, please call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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In May, a FINRA arbitration panel fined Brookstone Securities Inc., $1 million over the sale of risky CMOs (collateralized mortgage obligations) and said they made “fraudulent misrepresentation and omissions of material fact in selling complex, esoteric and risky tranches of [CMOs] to unsophisticated, elderly and retired investors.”  The FINRA panel also ordered its chief executive, Antony Lee Turbeville, along with a broker, Christopher Dean Kline barred from FINRA registered broker-dealers.

Brookstone and Antony Turbeville were jointly ordered to pay clients restitution of $440,600, while Brookstone and Christopher Kline were jointly ordered to pay $1,179,500 in restitution.

It was said in FINRA’s decision, that Turbeville and Kline “preyed on their elderly customers’ greatest fears,” such as losing their all of their savings to nursing homes and becoming penniless, thus enticing them into risky CMOs.

“Brookstone, Mr. Turbeville and Mr. Kline intentionally or recklessly misrepresented the CMO investments to their customers as a safe way, through government-backed bonds, to obtain a high rate of return on their investments,” according to the FINRA decision. “In reality, the CMOs the brokers purchased for the customers were high-risk investments whose returns were not assured, but instead, because of interest rate changes, were subject to dramatic changes in maturity, cash flow and value.”

According to FINRA, between July 2005 and July 2007,  Brookstone earned $492,500 in commissions over that time on CMOs, and investors lost $1.62 million.

Seven clients,  between 61 and 91, claimed they did not understand how CMOs worked and were not sophisticated investors, according to the FINRA decision.  FINRA has a long-standing warning to firms and advisers about selling CMOs, since 1993, when the CMO market collapsed. Finra, formerly NASD, warned that “in light of the complexity and the varying risk characteristics of CMOs, member must be conversant in all of the characteristics of CMOs to assess adequately the suitability of CMOs for their customers. Moreover, members must ensure that their customers understand the characteristics and risks associated with CMOs.”

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A group of retirees ambushed financial advisor James Amburn, 56, outside his home in Speyer, Germany. The group attacked him and put him into the trunk of a car. “It took them quite a while because they ran out of breath,” said Amburn, who was then driven to one of their homes where he was held prisoner. They were angry because Amburn had lost approximately $3.6 million of their investments–mostly Florida real estate investments.

Amburn, a financial advisor from Digital Global Net alleges, he was chained up “like an animal,” burned with cigarettes, beaten and had two of his ribs broken with a chair leg. “I was struck. Again and again they threatened to kill me. The fear of death was indescribable. I never thought I would make it out alive,” recounted Amburn.

Amburn was held captive for four days. Amburn said he told his attackers that he could get their money back if he sold certain securities in Switzerland, but would have to send a fax to a bank. They allowed him to send a fax. Amburn wrote a message on the bottom of the paper for the bank to notify the police.

The Swiss bank telephoned German police and rescued Amburn. The retirees, ranging in age from 61 to 80, now face charges of kidnapping, torture, and grievous bodily harm. These charges carry a maximum penalty of 15 years in prision. When the arrest took place, a physician had to be on hand to help his captors into police vans because of their various physical conditions.

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