FINRA and Broward Judge, Clamp Down on Broker's Alleged Efforts to Get Dogs' Inheritance

In a February 29, 2012, article from BrowardBulldog.org, Ann Henson Feltgen writes that a Broward County probate judge has nipped an alleged attempt to redirect a $3 million inheritance intended to care for four beloved show dogs following their owner’s death. Judge Mark Speiser threw out financial advisor Charles E. Bishop’s claim as inheritor of the estate and froze the $3 million account.

Feltgen writes that now, the Financial Industry Regulatory Authority (FINRA), a non-governmental agency that oversees investment companies, has charged Bishop, of Pompano Beach, with attempting to misappropriate the money when he was a broker with Merrill Lynch, Pierce, Fenner & Smith, Inc. in Fort Lauderdale.

“Bishop deceived the customer into believing that the money in her account would be transferred, after her death, to a company that she created to care for her prized show dogs,” say FINRA records. “Bishop’s scheme was foiled when a probate court refused to permit the transfer.”

According to Bishop, a hearing on the regulatory complaint is set for Sept. 10. If found guilty, he could be expelled from the securities industry and have to pay hefty fine. He could also face criminal charges if an adverse ruling is forwarded to prosecutors.

Bishop said he is innocent. “I’ve been trying to get a hearing for three years,” he said. “These are unsubstantiated allegations, they are very distorted.”

He declined further comment for the BrowardBulldog.org article.

According to the FINRA complaint, in 2005 Bishop began handling the investments of Fort Lauderdale residents Stephen and Elizabeth Lupe, an elderly, childless couple. Elizabeth Lupe had a passion for her four purebred Bouvier dogs, which regularly competed on the dog show circuit. To ensure the dogs a comfortable life after the couple’s deaths, in2006 Elizabeth formed Dancing Bear Kennel, which would receive the family’s assets. According to FINRA, Bishop handled the paperwork for the corporation and its account. Stephen Lupe, 77, died January 5, 2009, as his wife’s health was failing from a terminal illness.

Elizabeth Lupe “did not wish to leave her money to Bishop,” says FINRA’s complaint. Still, on Feb. 9 she signed a pair of Merrill Lynch documents that appear to have set Bishop up to inherit her $3.2 million brokerage account. A Merrill Lynch “client relationship agreement,” restated Dancing Bear Kennel as her beneficiary, but listed the company’s federal tax identification number as “applied for” when, in fact, it already had a tax number. A separate “transfer on death form,” providing for an immediate transfer of assets upon her death, named as beneficiary an entity with a slightly different name, Dancing Bear Kennel I.

Felton writes that Elizabeth Lupe’s signature is on the transfer form, but she “was not present before the notary when the signature was notarized,” the complaint says. IRS records list Bishop as the “sole member” of Dancing Bear Kennel I, according to the complaint. The entity was issued a federal tax number, but was never incorporated as a business. Nevertheless, state records show that on Feb. 11 Bishop incorporated yet another similarly named entity, Dancing Bear Dog Kennel LLC, listing himself as sole managing member.

Three days before Elizabeth Lupe’s death and 10 days after she executed the client relationship agreement naming Dancing Bear Kennel as her beneficiary, the agreement was “altered,” the complaint says. The words “applied for” were removed and the new tax identification number for Bishop’s new entity, Dancing Bear Kennel I, was added, the complaint says. Lupe did not acknowledge the change with her initials.

“Bishop’s actions assured that the paperwork at his firm made him the inheritor of (Lupe’s) Merrill Lynch brokerage account outside the probate process. He did this just after her husband died, and a few days before (her) own death,” the complaint says.

The Broward Probate Judge Speiser was assigned the case. One of the judge’s first actions was to freeze all accounts at the urging of Elizabeth Lupe’s close friend Irene Roussos, who feared she may have been taken advantage of and that the estate would be bled dry. Records show that two days after the accounts were frozen.

Speiser threw out Bishop’s claim and ordered the money transferred. The show dogs, Hot Shot, Party Girl, Lulu and Hoorah, were placed in adoptive homes and the $3.2 million divided among Elizabeth Lupe’s cousins.

According to the BrowardBulldog.org article, Bishop has made his living managing client investment accounts. In all, 11 complaints have been filed against Bishop with FINRA, three of which are still pending. Currently he is an independent financial contractor at National Asset Management in Boca Raton – a firm not regulated by FINRA. Bishop says he makes $15,000 a month.

Florida’s Office of Financial Regulation investigated Bishop when he applied to be a registered agent with National Asset Management, but approved him on the condition the firm place him under “strict supervision.”

Charles E. Bishop worked for Morgan Stanley in Fort Lauderdale from 1998 to 2008. While there, he was accused of misrepresentation in a bond purchase. A claimant was awarded $40,000 plus interest. Bishop then went to work for Merrill Lynch after getting a nearly $1 million sign-on bonus, court records say.

According to records filed during a Broward divorce proceeding filed in 2008, Bishop had two children in private schools, an expensive water-front home in Pompano Beach, two rental properties in Fort Lauderdale, two boats, a condo in Myrtle Beach, South Carolina and was the half-owner of another condo in the Florida Keys. His annual income was upwards of $300,000.

But Judge Alfred J. Horowitz noted that Bishop had improperly bought one of the Fort Lauderdale rental properties with a client, a professional conflict of interest. To hide the conflict, the judge said, Bishop put his wife’s name on the deed. In another instance, the judge wrote, Bishop “recommended to his clients to buy Myrtle Beach condos in the same development as his so that he could get a discount on his unit.”

Bishop, said Horowitz, “is motivated by his self dealing sometimes on the back of his clients.”

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member 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: www.securitieslawyer.com.