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Sometimes the moral decay that leads financial professionals to steal from their clients runs deeper than anyone could expect.
For instance, the news is out that Robert Bales, the U.S. Army staff sergeant accused of massacring 16 Afghan civilians, was a former stockbroker on the losing end of a 2003 arbitration before the Financial Industry Regulatory Authority (FINRA). Bales was found to have engaged in fraud, breach of fiduciary duty, churning, unauthorized trading, and the recommendation of unsuitable investments.
The arbitrators ordered Bales and his employer to pay $637,000 in compensatory damages and $637,000 more in punitive damages plus fees and interest. Bales then enlisted in the U.S. Army, apparently to avoid paying the elderly Ohio couple whom he had defrauded.
Bales is not the only such story. On Feb. 23, a FINRA hearing panel permanently barred financial advisor Daniel Edward Becerril II from the securities industry for misappropriating a customer's funds and converting them to his own use, among other things.
The fraud seems like ridiculous small change, however, considering Becerril was arrested for his alleged participation in murder-for-profit scheme a week later, according to a report in the Los Angeles Times. He is facing multiple felony charges including homicide, forgery, money laundering and grand theft.
The victim was Alexander Merman, a 35-year-old artist and Russian immigrant who was murdered in 2008.
Another report in Los Angeles Weekly said police believed Becerril had taken about $550,000 from Merman while acting as his financial adviser and that Merman discovered this fact a short time before he was killed. Becerril had deposited $300,000 of Merman's money into his personal account.
The report said Becerril is being held without bail in Santa Monica, Calif., and that his wife was also arrested. The Merman murder investigation also uncovered another fraud allegedly perpetrated by AP Financial Group Inc., Becerril's securities business, involving the unlawful sale of a home without the knowledge of the owner.
Police said in the report they think there may be many more people out there who have been defrauded by AP Financial Group. Oddly enough, FINRA public disclosure records on Becerril show only the recent alleged fraud, though he joined the securities industry in 2002.
Regarding FINRA's decision to bar Becerril, he was found to have made material misstatements and omissions to a customer. He also misused customer funds and for failed to respond to FINRA's a request for documents after the customer filed a complaint. He was also ordered to pay costs.
The customer in question, identified only as CB in the hearing panel decision, filed her complaint in July 2009, after Becerril gave her the run around regarding $11,500 she had given him to invest in a mutual fund on behalf of her daughter.
Becerril misappropriated CB's funds by placing them a bank account he controlled, the decision said. The matter goes back to December 2008, when CB met with Becerril to discuss investing her minor daughter's inheritance. Becerril was a financial adviser associated with Veritrust Financial LLC at the time but he also had his securities business, AP Financial.
CB requested a safe investment and Becerril recommended the AIG Sun America 2010 High Watermark Fund, the decision said. The customer filled out the paperwork and gave Becerril the $11,500 check to invest in the fund. Becerril directed her to make the check payable to AP Financial.
By January 2009, CB had not yet received confirmation of her investment so she called Becerril to inquire. He then faxed her letter stating that the investment would settle in two days. It did not happen, the decision said.
Moreover, after the investigation began, Becerril claimed that he did not send the letter and that CB had faked it, a claim the FINRA panel found "far-fetched."
Reassured by this letter, CB kept waiting. After a time she became concerned again. In April 2009, she asked Becerril to return her funds. He then sent her an email stating his intention to do so, but it turned out to be the first of many stall tactics, the decision said.
In other correspondence, Becerril claimed that a refund would take awhile because he had completed the buy-in the week before. CB contacted AIG to check on the story. AIG told her it that it had no record of her investment.
In May 2009, Becerril sent CB an account transfer form that would supposedly be used to return her money. When she still had not received her funds more than a month later, she warned Becerril she was going to file a complaint and was subjected to yet another stall tactic. She filed her complaint with FINRA in July.
When Veritrust, Becerril's employer, learned of the complaint it launched an investigation. Becerril's supervisor told him that he planned to contact law enforcement and advised Becerril to return CB's funds.
In late August 2009, Veritrust fired Becerril, according to the decision. CB got her funds back a few days later. Considering what is alleged to have happened to Alexander Merman, CB should count herself lucky.
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If you have been the victim of securities fraud you should consult with an attorney. The practice of Nicholas J. Guiliano, Esq., and The Guiliano Law Firm, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.
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