Source Capital Group Inc. must pay three elderly investors their full investment of $810K plus $147K in interest, as well as $250K in legal fees, in a securities arbitration case accusing one of the investment bank’s brokers of selling them unsuitable investments. William Lashlee and Joyce and Keith McCrea filed their elder financial fraud claim with the Financial Industry Regulatory Authority.
According to the retirees, the broker sold them stock in a health care tech start-up in 2012. Lashlee invested $220K while the McCreas invested $590K. Unfortunately, the start-up, iPractice Group, shuttered its business in 2013.
The claimants claim that Source Capital was negligent in supervising the broker who sold them the securities. Although the broker was assigned to the firm’s Bowling Green, Kentucky branch, the manager there was purportedly never notified that this particular financial representative was under his supervision.
Last month, FINRA issued a complaint against Source Capital accusing the firm of not fulfilling its duty to oversee its Bowling Green office from 9/2009 to 9/2014. The regulator claims that the Connecticut investment bank allowed the principals of two companies, with stock that Source Capital brokers were selling to investors, to oversee the firm’s financial representatives and run its operations.
Unfortunately, older investors remain a favorite target for fraudsters and others seeking to take advantage of retirees and other elderly persons’ healthy savings accounts, advanced age, poor health, or mental impairments. Just last week, Peter Martorana a former MetLife Securities (MET) and Pruco Securities representative pleaded guilty to laundering over $500K from older investors between 2006 and 2013. Authorities claim that he stole about $1M from over a dozen of the firms’ elderly clients who were from the 60’s to 90’s age group. He now faces 10 years behind bars.
If Martorana had opted not to accept the plea agreement, the criminal case against him would have gone to trial. Not all of his victims, however, would have been able to testify because they are either already deceased or due to advanced age.
New Study Links Mild Impairment in the Aging with Vulnerability to Fraud
Some senior investors who are capable of handling their finances may still be vulnerable to fraud. According to a new report issued from the Center for Retirement Research: even if an older investor in their 70’s can adequately manage their finances, if he/she is suffering from mild cognitive impairment, this could make the investor vulnerable to fraud especially if they remain unaware of the impairment.
It is important to remember that elder financial fraud can be perpetuated not just by a financial professional, but also by caregivers, family members, or someone else that the older investor knows and trusts. For a retiree or another older person who relies heavily on their savings for financial support, the consequences of losing money because of fraud can have devastating ramifications.
At Shepherd Smith Edwards and Kantas, LTD LLP, our senior financial fraud law firm represents older investors and their families in trying to recoup their fraud losses. Contact one of our broker fraud attorneys today.
Financial adviser stole over $1M from elderly, Asbury Park Press, February 2, 2017