Rulebook

Blotter Report: The Bad Boys of the Brokerages

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This week's roundup highlights advisors at several major brokerage firms including Merrill Lynch and Wells Fargo, who have been caught thieving client's hard-earned cash through various schemes and set-ups. 

Blame it on the Tsunami?

New Jersey brokerage firm Buckman, Buckman & Reid is in hot water after a Florida couple complained their advisor Michael Morris lost their savings on high-risk investments. The excuse? A tsunami.

According to the complaint, the couple invested over $180,000 with Morris starting in November 2010, asking the former Buckman broker to keep the funds safe until they could purchase a house. But when the couple found a house in March 2011 and sought use their savings, Morris explained the couple’s investments had taken a hit, losing thousands of dollars because of the recent tsunami in Japan.

But the couple wasn’t buying it. They filed a complaint with FINRA on Friday, accusing Buckman of failing to supervise its brokers, saying the firm missed “red flags” that showed its advisor was recklessly speculating in risky stocks that saw drastic price valuations and had high turnover in at least one of the accounts—three times in 30 days.

The couple is asking the firm for almost $50,000 in damages, saying a tsunami does not excuse Buckman’s liability for Morris’ unsuitable recommendations.

 

Behind Bars For Living Large…on Client Assets

Although he didn’t splurge on caviar and cases of champagne, former Merrill Lynch advisor James Ryan Lanier picked up a few perks for himself in recent years—on his clients’ dimes.

For using client funds to buy vehicles, an interest in a telecom business and a Georgia condominium, a Florida federal judge sentenced Lanier to 106 months in jail.

According to prosecutors, Lanier embezzled over $800,000 from clients by forging wire transfer authorizations and falsely telling Merrill Lynch client associates that his customers had verbally approved the transfers. 

Lanier pled guilty in November to over 20 counts of fraud, embezzlement and theft related to the two-year scheme. In addition to the more than 10-year prison sentence, the judge also ordered Lanier to pay $887,931 in restitution to Merrill Lynch.

 

Another Day, Another Ponzi Scheme

Can we just call it theft? The sexiness of “Ponzi scheme” is starting to wear thin. But until then, North Dakota prosecutors leveled additional charges against a former Associated Financial Services broker who allegedly bilked over a dozen clients out of approximately $900,000.

Cass county officials charged Robert Medhus in December with two counts of felony theft, but added 14 more securities violations on March 7 after uncovering evidence that Medhus ran a 10-year “Ponzi-like” scheme, according to a Fargo news outlet.

Rather than making the appropriate investments, Medhus allegedly deposited client funds in his personal accounts and forged client account statement on his firm’s letterhead.

The Fargo-based advisor’s arraignment on the new charges is scheduled for April 11. If convicted, each of the new charges carries a 10-year prison sentence.

 

Stealing From Little Old Ladies

Looks like some criminals are getting their schemes right from the plotlines of Saturday morning cartoons these days. FINRA sent former Wells Fargo advisor Adorean Boleancu packing for his alleged role in swindling an elderly widow out of at least $650,000 through a series of unauthorized checks.

Drawing against the widow’s two home equity lines of credit, Boleancu allegedly issued checks in his client’s name, including to his girlfriend. FINRA also alleged that Boleancu also made unauthorized payments from his client’s checking account.

The regulator barred the San Francisco-based advisor from associating with any FINRA member and ordered Boleancu to pay $650,000 in restitution to the widow, who was described as an “unsophisticated and inexperienced investor.”

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