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Category Archives: Elder Abuse

Have You Experienced Investment Losses?

In March of 2020, America has experienced the unprecedented pandemic known as the Coronavirus. The US stock market has declined by more than a 1/3 from its all-time high in February 2020. Some investors have watched their own portfolios decline by 30-50%.

In some instances, your investment losses could be normal market decreases. However, in other instances your losses could be due to mistakes made by your financial advisor. You could have been unsuitably invested in a portfolio that was too risky for you. Some of your investments could have been inappropriate. The risks of your investments may not have been accurately discussed with you. The typical American investor needs an experienced attorney to help him or her evaluate whether their losses are actionable against the advisor or firm that recommended them.

At Maddox Hargett & Caruso, P.C., we have been advising clients about their investment losses for over 30 years. We give investors free initial evaluations to help them understand the viability of their case against their financial advisor and his firm. If you are trying to understand whether your investment losses are attributable to normal stock market declines or breaches of duty by your advisor or firm, please contact us. We are here to help you make an informed decision. Call us at 317-598-2040 or check out our website at

Report on National Senior Investor Initiative Released by FINRA & SEC

Over the next 15 years more and more baby boomers will be turning 65, the SEC and FINRA issued a report this month to help broker-dealers evaluate, craft, or improve their policies and processes for investors as they prepare for and enter into retirement. The National Senior Investor Initiative report focuses on issues related to senior investors and regard to compliance with laws, rules, and regulations applicable to senior investors to be a high regulatory priority. Concerns that some broker-dealers may be recommending riskier and possibly unsuitable securities to senior investors looking for higher returns and may be failing to adequately disclose the terms and risks of the securities they recommend.

Susan Axelrod, FINRA Executive Vice President, Regulatory Operations, says, “With the dramatic increase in the population of our nation’s seniors, it is critical that securities regulators work collaboratively to make sure that senior investors are treated fairly. The culture of compliance at firms is key to ensuring that seniors receive suitable recommendations and proper disclosures of the risks, benefits, and costs of any investments they are purchasing.”

New Hampshire Requesting LPL Financial to pay $3.6M

In a filing last week, The New Hampshire Bureau of Securities Regulation says they are seeking $2.4 million from LPL in buybacks and restitution for clients in 48 sales of nontraded real estate investment trusts that date back to 8 years ago. The rest of the $3.6M stems from a request for a $1 million fine and $200,000 in investigative costs. The state is claiming the sales were “unsuitable and unlawful” and that the advisors allegedly conducted unsuitable sales of real estate investments for their elderly clients.

When the Elderly Become Financial Targets

Elder fraud is one of the fastest-growing crimes in the United States, with several research studies reporting that the elderly lose more than $3 billion every year to financial fraud and investment scams.

Earlier today, Mark Maddox joined Indiana Secretary of State Connie Lawson and Nancy Stone of the Senior Medicare Patrol on WFYI’s No Limits with John Krull for a discussion on Elderly Fraud. Among other things, the panel talked about common investment scams that target the elderly, what children of aging parents can do to protect their elderly parents from becoming investment fraud victims and the red flags of elder fraud.

“Seniors are targeted for a number of reasons; many have money, some are retired or lonely. We see a lot of seniors these days who have been preyed upon by people they trust: greedy children, unscrupulous caregivers. One of the biggest cases we worked on a few years ago and which was seen in the movie, the Wolf of Wall Street, concerned Jason Belfort and Stratton Oakmont. His boiler room operation stole about $200 million from customers – most of whom were seniors,” said Mark Maddox of Maddox Hargett & Caruso on today’s program.

If you missed today’s show, you can listen to it here.

Elder Fraud to Be Discussed on NPR Today

The issue of Elder Fraud will be featured on NPR’s No Limits program today, Jan. 23, from 1 to 2 p.m. EST. Panel guests include Mark Maddox of Maddox Hargett & Caruso, P.C., Indiana Secretary of State Connie Lawson and Nancy Stone of the Senior Medicare Patrol. Join the conversation and post any questions you may have for the panel at

A summary of the show will be posted here on this Web site later today.

The Big Stories of 2013

The top stories in the investment world for 2013 ran the gamut, from non-traded REIT deals that soured to a stampede of broker/dealers closing up shop. Among the highlights in 2013:

Non-Traded Real Estate Investment Trusts (REITs). In June, William Galvin, Secretary of the Commonwealth of Massachusetts, announced settlements with Ameriprise Financial Services Inc., Commonwealth Financial Network, Lincoln Financial Advisors Corp., Royal Alliance Associates and Securities America over sales involving non-traded REITs.  As part of the settlement, the five firms agreed to make $6.1 million in restitution to investors and pay fines totaling $975,000.

LPL Financial. In February, LPL Financial LLC was order by the Massachusetts Security Division to pay restitution of more than $2 million to investors who bought shares of non-traded real estate investment trusts (REITs). In addition to the restitution order, Massachusetts regulators levied a $500,000 administrative fine against LPL.  The settlement stemmed to allegations that LPL failed to supervise brokers who sold investments in non-traded REITs. LPL also agreed to review all other non-traded REITs offered to Massachusetts residents and to make restitution to investors in the state whose transactions violated Massachusetts or company rules.

Separately, a former adviser affiliated with LPL Financial LLC was charged in May by the Securities and Exchange Commission (SEC) of defrauding investors and stealing $2 million from at least six clients. According to the civil complaint, the adviser, Blake Richards, misappropriated client money that “constituted retirement savings and/or life insurance proceeds from deceased spouses.”

In one instance, Richards allegedly tried to gain an investor’s trust by delivering pain medication during a snowstorm to a client’s husband who had been diagnosed with terminal pancreatic cancer, according to the SEC complaint.

Private Placements.  Four culprits behind a massive multimillion-dollar private-placement fraud known as Provident Royalties were given jail sentences by U.S. District Judge Marcia A. Crone. Brendan Coughlin, 46, and Henry Harrison, 47, were sentenced to 21 months in federal prison. They founded and controlled Provident along with Joseph Blimline, 35, who already had been sentenced to 12 years in prison. Paul Melbye received a sentence of 18 months in prison.

Columbia Property Trust. Non-traded REITs again made headlines when Columbia Property Trust went public in October at $22.50 a share. Before going public, however, the REIT underwent a complicated reverse 4-for-1 share split, raising its price to around $29 a share from just over $7.33. Investors who initially bought into the REIT at $10 a share essentially were offered the opportunity to cash out at a net asset value of around 45% less than the price they paid at their initial purchase.

Making matters worse is the fact that Columbia Property Trust had cut its distributions twice since 2009.

Bambi Holzer. Known as the broker to the stars, Bambi Holzer made a name for herself in the securities industry by providing financial advice to Hollywood names like Julia Louis-Dreyfus (who ultimately sued Holzer over a dispute concerning $4.4 million invested in annuities). In October 2013, the Financial Industry Regulatory Authority (FINRA) also sued Holzer for allegedly lying to one of her former firms, Wedbush Securities, about the net worth of several clients when she sold preferred shares of one of the series of fraudulent deals issued by Provident Royalties LLC in 2008.

In December 2013, Holzer was officially barred from the securities industry as part of a settlement with FINRA.

Elder Fraud. Elder financial fraud and abuse came to the forefront of the big investment stories in 2013 as several research studies reported that the elderly were losing more than $3 billion every year to financial fraud and investment scams. Many of the scams involved unsuitable investments, variable annuities and alternative financial products like non-traded REITs and private placements.

Protecting investors – and especially the elderly – was in part behind a move by the Securities and Exchange Commission (SEC) to release a special bulletin warning investors about the myriad of financial titles in existence today. Among other things, the bulletin stressed that financial professional designations and licenses are not the same and that investors should never rely solely on a title to determine whether a financial professional has the expertise they need.

UBS Puerto Rico Bonds. In November, a unit of UBS AG offered to repurchase shares of closed-end municipal bond funds invested in Puerto Rico muni securities from certain clients. During the summer, the market for Puerto Rico’s $70 billion muni debt went south after Detroit filed for bankruptcy in July. UBS Financial Services of Puerto Rico is a huge player in the muni debt market in Puerto Rico, packaging and selling $10 billion in proprietary closed-end bond funds through the end of 2012. Meanwhile, the net asset value (NAV) of the 14 UBS closed-end funds have plummeted.

Investors purchased the proprietary bond funds for $10 a share. According to a story by Investment News, the NAV for the $375 million Puerto Rico Fixed Income Fund was $3.63 at the end of October, down 85% since the end of June. The NAV for the $449 million Puerto Rico Fixed Income Fund III was $4.08 at the end of October, a decrease in value of 68% since June.

Why It’s Easier to Scam the Elderly

Older adults are more likely to become victims of investment fraud and financial scams than the general public. In many cases, the root of this fraud is related to the so-called elder investing expertise of the financial advisers that seniors turn to for financial advice.

A simple search on the Internet of financial advisers for seniors will produce a multitude of different titles, including elder care financial specialist and senior financial adviser. For many older investors, it’s difficult to know if these individuals actually have the proper training and credentials they say they have to help investors with their money.

Earlier this year, the Consumer Financial Protection Bureau released a report on senior designations and what older Americans can do to prevent themselves from being scammed by financial advisers who may falsely claim to specialize in giving advice to seniors. According to the report, there are more than 50 senior designations in today’s marketplace by people recommending or selling products such as securities, investment opportunities, financial products, and insurance products like annuities and long-term care insurance.

Some of these designations are legitimate and require specific training and professional license; others, however, are simply window dressing.

The CFPB advises elderly investors to thoroughly check the background of any financial adviser with a senior designation behind his or her title. Among the resources you can use:

*The Financial Industry Regulatory Authority’s Broker Check Web site. Broker Check lets you search the professional backgrounds of securities brokers and investment advisers, as well as their firms.

*The Investment Adviser Public Disclosure (IAPD) database. IAPD provides instant access to registration documents filed by more than 25,000 SEC- or state-registered investment advisers. IAPD also provides access to registration information filed with the states by investment adviser representatives (certain individuals that are employed by an investment adviser).

*If your adviser sells insurance, the CFPB recommends that you contact your state insurance commissioner for additional information.

*If your adviser sells securities, your state securities regulator can provide additional information.


New Guide to Assist Financial Fraud Victims

A new informational tool has been released by the National Center for Victims of Crime and the FINRA Investor Education Foundation to help victims of financial fraud.

Taking Action: An Advocate’s Guide to Assisting Victims of Financial Fraud provides step-by-step strategies to address major types of financial crime, including investment fraud, identity theft, mortgage and lending fraud, and mass-marketing scams. The guide is available for download or can be ordered from within the Program and Outreach Toolkit on the FINRA Foundation’s Web site.

“While prevention strategies have an important role to play in addressing financial fraud, the increasing incidence of financial fraud has made more urgent the importance of consistent and accurate advice to victims,” said FINRA Foundation President Gerri Walsh in a statement.

Financial fraud strikes people from all walks of life, and older Americans are especially vulnerable. A recent survey from the FINRA Foundation of nearly 2,400 U.S. adults age 40 and older revealed that more than 80% of respondents had been solicited to participate in potentially fraudulent schemes, and more than 40% of those surveyed could not identify some classic “red flags” of fraud. Additionally, Americans age 65 and older are more likely to be targeted by fraudsters and more likely to lose money once targeted.

The financial effects of investment fraud are enormous, costing consumers billions of dollars every year. A report by the Financial Fraud Research Center – Scams, Schemes and Swindles: A Review of Consumer Financial Fraud Research – found that an estimated $40 billion to $50 billion of measurable, direct costs are lost to fraud annually.

Taking Action represents not only an innovative collaboration between The National Center and the FINRA Foundation, but an important advancement in the victim services field,” said Mai Fernandez, Executive Director of The National Center for Victims of Crime.

Fraud researchers typically find that only a small percentage of people actually report to authorities that they’ve been a victim of financial fraud. In the FINRA Foundation’s survey, a small group of respondents who admitted to investing in a fraudulent investment, but did not report the fraud, said that reporting the crime would not have made a difference, that they did not know where to report it or that they were too embarrassed. Taking Action was developed, in part, to help increase the number of victims who report fraud and get access to assistance.

Indiana Investment Adviser Arrested on Securities Fraud

Investment scams targeting the elderly are a thriving business for some unscrupulous individuals and so-called companies posing as legitimate financial firms. From  Bernie Madoff, to Medical Capital Holdings, to Tim Durham and, more recently, Indiana investment adviser Lynn Simon.

Simon of Evansville, Indiana, was arrested this spring on charges that he swindled more than $1 million from at least a dozen investors. He now faces three counts of securities fraud, Class B felonies, and a charge of unlawful sale of a security, a Class C felony.

Last week, Simon surrendered at the Vanderburgh County Jail.

According to court documents, several investors who lost money in Simon’s “investments” were elderly. One of the investors included a couple who lost $50,000 that they had planned to use for their retirement years.

The investigation into Simon came to a head in May after an Evansville resident filed a complaint with the Indiana Secretary of State’s office stating that he had stopped receiving interest payments on his investment with Simon. Court records show that Simon’s wife told this investor that Simon had been missing for two weeks.

Simon was a registered investment adviser with CFD Securities in Kokomo, Ind., and operated an office in Evansville under the name Financial Security Planning. Court records show that he was the sole owner of Financial Security Planning, as well as The Insurance Shoppe.

As reported by the Evansville Courier & Press, Simon’s arrest affidavit details an investment scheme involving investments for a private fund allegedly operated by Simon. Investors who invested in the fund were reportedly promised higher rates of returns on their investments. In some instances, the return rates were as high as 11%.

Investigators say that as part of the scheme, Simon issued typewritten promissory notes showing a rate of return at a specified maturity date. Simon did not register any of the investments that were sold under the Financial Security Planning name with the state of Indiana.

In addition, bank records did not show any money going to investments or insurance companies as purported by Simon, the Evansville Courier & Press story said. Instead, according to the affidavit, the records showed investor money going in and then either going to other investors or being withdrawn by Simon.

Investigators also say that Simon was the only person who was authorized to use the account. In addition, the records showed more than $42,000 had been withdrawn on the day before Simon’s wife first reported him missing.

Simon’s arrest serves as a cautionary reminder on the importance of thoroughly researching any investment opportunity, as well as the person or company presenting that investment. In the end, the extra homework can go a long way in preventing financial devastation.

SEC Notice Warns Investors About Financial Titles of Advisers

The designations used by financial advisers can confuse even the most sophisticated investor, let alone individuals with little knowledge about financial products or investing. This confusion has led the Securities and Exchange Commission (SEC) and the North American Securities Administrators Association to issue an investor notice about the myriad of financial titles circulating today.

The joint bulletin, which was released yesterday, stressed that financial professional designations and licenses are not the same and that investors should never rely solely on a title to determine whether a financial professional has the expertise they need.

Indeed, some financial titles can simply be purchased or even made up by financial professionals who hope to imply that they have certain expertise or qualifications, says NASAA. In most cases, such titles are generally marketing tools and not granted by a regulator.

Earlier this year, the Consumer Financial Protection Bureau released a report focusing on the proliferation of “senior designations.” The report stated that some financial professionals had taken advantage of elderly consumers by using senior qualifications and selling “inappropriate and sometimes fraudulent financial products and services.”

The SEC/NASAA bulletin offers a number of questions that investors can ask to determine whether a financial adviser has the expertise he or she is touting. Among the questions and recommendations:

What is the name of the organization that awards the financial professional title?

What training, ethical, and other requirements were performed to receive the financial professional title?

Did you have to take a course and a test?

Does the financial professional title require a certain level of work or educational experience?

To maintain the financial professional title, are you required to attend periodic continuing education courses?

The notice also suggests that investors confirm any information provided by the financial professional about his or her financial professional title.  This information may be available on the Web site of the organization that awards the financial professional title. Investors also can check the Web site of the Financial Industry Regulatory Authority (FINRA) and the “Understanding Investment Professional Designations” section.

Finally, the notice encourages investors to contact the organization issuing the financial title to confirm that the financial professional is currently authorized to use the title and to determine if they have any disciplinary history.


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