Next Financial, LPL Added To Jeremy McGilvrey Lawsuit
The brokerage firms of Next Financial and LPL Financial have both been added as defendants in a Bexar County, Texas, lawsuit that claims an elderly San Antonio couple -Thomas H. Crouch, 93, and his wife, Dorothy, 89 – lost nearly $2 million because of a fraud scheme masterminded by financial adviser Jeremy McGilvrey. McGilvrey is the once-flamboyant owner of the now-defunct Hill Country Wealth and a registered agent for LPL and Next Financial.
According to an Aug. 14 article by the San Antonio News, the complaint in the Crouch case accuses McGilvrey, Hill Country Wealth President Lance Smith and others of “plundering” the elderly couple’s wealth by inducing them to make risky investments, buy stock in Hill Country Wealth and even lend the firm money. The lawsuit was filed by James Crouch, who serves as guardian for his father and stepmother. The elderly Crouch apparently suffers from Alzheimer’s disease and dementia, while his wife is being treated for depression and memory loss.
“McGilvrey and Smith embarked on a scheme to take as much money from their clients as possible, including the sale of the client’s solid, safe investments, in order to have cash in the accounts of Hill Country Wealth, and in the pockets of McGilvrey and Smith,” the lawsuit said.
Among the charges listed in the complaint: Fraud, sale of unregistered securities and civil conspiracy.
According to information posted on the Financial Industry Regulatory Authority’s Web site, McGilvrey’s employment history says he worked for LPL until June of 2008 when he was “permitted to resign” for “failure to properly supervise (a) registered representative with respect to reporting of (a) direct business transaction.”
His “next” stop, albeit short lived, was Next Financial. In May, he was fired for violating company policy by borrowing from a client. Reportedly those clients are the Crouches.
McGilvrey’s professional intrigue doesn’t end there. An Aug. 2 article in the San Antonio News says McGilvrey reportedly told prospective clients that he had received the “Top 100 Financial Advisors Award” from Money Magazine for four consecutive years. McGilvrey further cited articles about his investing prowess in the Wall Street Journal and Fortune Magazine. In reality, however, the award McGilvrey connected to Money Magazine hasn’t existed for 20 years. And the newspaper citations could not be found.
As for Next Financial, it is no stranger to lawsuits based on charges of failure to supervise its agents. In 2008, FINRA records show that Next Financial paid a $1 million fine because it “failed to create a reasonable system and written procedures for supervising branch offices, regional managers and registered representatives.”
The same FINRA report also states that a manager with Next Financial “churned customer accounts whereby customers lost $565,000 because no one at the firm was reviewing his transactions.”
Next Financial also is one of several independent broker-dealers with advisers selling private securities of an oil and gas partnership – Provident Asset Management LLC – that the Securities and Exchange Commission (SEC) charged last month of committing a $485 million Ponzi scheme.
In addition to the civil litigation, the Texas State Securities Board and San Antonio police are investigating possible criminal offenses by McGilvrey and others.
Meanwhile, McGilvrey – who once cultivated an image of wealth with his black Bentley convertible and trips to Las Vegas and Australia on a private jet – is missing in action. He has not been seen or heard from in months.
