Jeremy McGilvrey, a former broker with Next Financial Group and LPL Financial and one-time CEO of the now-defunct Hill Country Wealth investment firm, had a reputation for extravagance: A black Bentley convertible, exotic vacations and celebrity parties. Today, McGilvrey is trading his fancy suits for a different kind of fashion wear: a prison uniform.

On Dec. 1, 2009, Bexar County state District Judge Maria Teresa sentenced the former high-flying investment adviser to 20 years in prison for swindling clients out of millions of dollars. McGilvrey also was ordered to pay a $10,000 fine and nearly $2 million in restitution to his victims. The amount could increase if authorities identify additional clients taken in by the Texas broker.

In October, McGilvrey, 32, pleaded guilty to felony theft and misapplication of fiduciary property of clients, most of whom were elderly. Two victims, Thomas and Dorothy Crouch, were taken for an estimated $1.6 million. Their son, Houston attorney James Crouch, has since filed a lawsuit against McGilvrey.

The 94-year-old Crouch, who once served as deputy surgeon general of the U.S. Air Force, died Nov. 30, 2009. He suffered from Alzheimer’s.

McGilvrey was fired from Next Financial in May 2009 for “borrowing money from a client,” according to records with the Financial Industry Regulatory Authority (FINRA).

Before joining Next Financial, McGilvrey was affiliated with LPL Financial of Boston. FINRA records state that he was “permitted to resign” from LPL last year after failing to properly supervise a registered representative and for not reporting a business transaction.

Next Financial also is one of a number of independent broker/dealers with advisers connected to sales of private securities of an oil and gas partnership, Provident Asset Management LLC. In July, the Securities and Exchange Commission (SEC) charged Provident of committing a $485 million fraud.

Our lawyers are actively pursuing Jeremy McGilvrey and Next Financial Group. Please tell us about your investment losses by leaving a message in the comment box, or the Contact Us page. We will counsel you on your options.

LPL Financial Corp. (LPL) will pay nearly $1.3 million in restitution to Montana investors plus a fine of $150,000 to the State of Montana under a settlement reached with the Montana Commissioner of Securities and Insurance. The restitution and fine are tied to alleged illegal activity on the part of a former LPL registered representative, Donald Chouinard, who is accused of operating a Ponzi scheme and the alleged failure of LPL to supervise him.

The settlement with LPL did not resolve any claims against Chouinard individually or his companies, which the Montana Department of Securities continues to pursue.

In September, the state of Montana issued a Temporary Cease and Desist Order against Chouinard and filed a Notice of Proposed Agency Action against him and his companies, DC Wealth Management and DC Associates. The action alleges that Chouinard and his companies committed securities fraud and conducted a Ponzi scheme involving Montana and Idaho investors who invested in what they thought was a “day-trading” program. In reality, however, the investors received proceeds taken from money contributed by newer investors.

Specifically, the Department’s action alleges Chouinard convinced one investor to obtain a $100,000 loan and invest with him because he could guarantee a high return in 30 days. Instead of investing the $100,000 in the “day-trading” program, Chouinard used $50,000 to pay off a previous investor, deposited $25,000 into his personal joint-checking account, and gave the other $25,000 to his attorney.

The Department also alleges that Chouinard traded investors’ accounts without their authorization, forged investors’ signatures to authorize certain trades, and failed to provide investors with statements or tax documents for their “day-trading” investments. Chouinard routinely informed the investors about the values of their investments orally or via email. The investors allege Chouinard misrepresented the values of their investments - in one case by as much as 10,000%.

The excessive trades resulted in thousands of dollars in commissions for Chouinard.

If you have suffered losses in LPL Financial and wish to discuss your situation, please leaving a message in the Comment Box below or via the Contact Us form. We want to counsel you on your legal options.

Two investment companies owned by a former LPL Financial broker have been shut down by the Montana Commissioner of Securities and Insurance on allegations their owner, Donald Chouinard, was running a Ponzi-like scheme that bilked investors, including some of Chouinard’s own friends, out of millions of dollars.

In addition to working for LPL Financial as a broker/dealer salesperson and investment adviser, Chouinard operated DC Wealth Management and DC Associates. On Sept. 18, Montana Commissioner of Securities and Insurance Monica Lindeen filed a Notice of Proposed Agency Action and issued a temporary Cease and Desist Order against Chouinard and his companies. According to state officials, Chouinard traded in investors’ LPL accounts without their authorization, traded excessively, and forged their signatures to authorize the trades. The excessive trades resulted in nearly $250,000 in commissions for Chouinard.

The Montana commissioner also says Chouinard failed to provide investors with statements or tax documents for their “day-trading” investments. Instead, he routinely informed investors about the values of their investments orally or via email. The complaints further allege that Chouinard misrepresented the values of various investments—in one case by as much as 10,000%.

Chouinard was fired from LPL in May.

One complaint alleges that Chouinard convinced an investor to make him a $100,000 loan and invest with him because he could guarantee a 40% return in 30 days. Instead of investing the money, however, Chouinard used $50,000 to pay off a previous investor, deposited $25,000 into his personal checking account, and gave the other $25,000 to an attorney.

Commissioner Lindeen’s complaint charges Chouinard and his companies of violating the antifraud provisions of the Montana Securities Act. Lindeen’s office is seeking to revoke Chouinard’s Montana securities license and suspend or revoke Chouinard’s Montana insurance producer license, as well as levy fines and demand restitution for investors. Chouinard could face penalties amounting to millions of dollars.

Tell us about your situation with a Ponzi scheme by leaving a message in the Comment Box below or Contact Us form. We want to consult you on your legal options.

Linsco Private Ledger, which now goes by the name of LPL Financial Services, is at the center of a growing list of arbitration claims and lawsuits in connection to one of its former brokers, Raymond Londo. LPL is accused of failing to supervise Londo, who allegedly scammed millions of dollars from investors in an elaborate Ponzi scheme. Londo’s victims include friends, neighbors and even his own family.

Londo was fired from LPL on March 6, 2008. During his lengthy tenure with the company, however, there was an abundance of customer complaints and red flags regarding Londo’s service and investing strategies. Complaints about Londo’s sales practices also occurred at his former place of employment, Edward Jones.

Despite these warning signs, LPL not only hired Londo but chose to forego taking any action against the financial advisor until his termination in March 2008. By that time, investors in Illinois, Iowa and Wisconsin, as well as elsewhere, had lost millions and millions of dollars to Londo. 

Specifically, Londo is accused of borrowing money from the accounts of investors and then promising them a certain rate of return. Under FINRA Rule 2370, it is illegal for registered representatives to borrow funds from their clients. Investors now contend if LPL had exerted proper supervision of Londo, the abuses would never have occurred.

LPL was formed in 1989 through the merger of Linsco Financial Group and Private Ledger Financial Services. Today, the company is considered the fifth-largest brokerage firm in the United States, with nearly 13,000 financial advisors.

Investors are continuing to sue LPL by filing arbitration claims with the Financial Industry Regulatory Authority (FINRA) for the financial losses they incurred in Londo’s Ponzi scheme.

In 2007, a Dec. 24 article in Barron’s magazine lauded David Steckler, an institutional money manager with LPL Financial Services, for his investing strategies to hone in on supposedly solid-performing stocks. Less than six months after the publication of that article, however, Steckler, who joined LPL in 1989, would be fired from the company.

According to disclosures listed on the Web site of the Financial Industry Regulatory Authority (FINRA), Steckler’s termination on March 12, 2008, was based on “violations of company policy with regards to engaging in a referral arrangement with an LPL Financial client and making a personal investment with an LPL Financial client in a private securities transaction without notice to or approval from the firm.”

Documents filed Sept. 11, 2008, in the U.S. District Court for the Northern District of Illinois shed further light on the issue. According to those documents, the Enterprise Trust Company - for which LPL’s Steckler had brought accounts to - caused tens of millions of dollars in client losses, mostly through unsuccessful speculative trading in margin accounts. In order to engage in trading of this magnitude, Enterprise had to pledge as collateral securities that belonged to clients who maintained custodial accounts with Enterprise. The majority of the assets in the custodial accounts consisted of mutual fund holdings, many of which were held in IRA and other qualified retirement accounts. The custodial clients neither knew of nor approved of the margining of their assets. 

The documents go on to state that Enterprise was able to use the custodial assets as collateral for the benefit of its managed clients because it caused all securities entrusted to it to be placed in Enterprise’s name. The assets were then commingled in omnibus accounts and used as though they belonged to Enterprise. As a result, Enterprise effectively misappropriated securities of custodial clients, ostensibly to make money for its managed clients. Further, statements that were sent to custodial clients disguised the misuse of their assets, their financial losses and the trading activity that caused the losses.

Long before Bernie Madoff made news, there was financial advisor Raymond Londo. In March 2008, Ray Londo was fired from Linsco Private Ledger (now known as LPL Financial, or LPL for short) for failing to follow company policies on lending or borrowing funds from clients. Before his termination, however, Londo allegedly operated a multimillion-dollar Ponzi scheme that entailed converting millions of dollars of clients’ assets.

As with Madoff, Londo’s victims reportedly included neighbors, country club associates and family members. Today, Londo and LPL are at the center of ongoing investigations connected to the alleged fraud, as well as numerous arbitration claims filed with the Financial Industry Regulatory Authority (FINRA) by investors who suffered financial losses.

LPL’s role in the alleged actions focuses on the fact that LPL ignored repeated warning signs concerning Londo and that it failed to properly supervise his actions during his employment with LPL. It was only after Londo had defrauded dozens of clients, bilking millions of dollars from their accounts, that LPL terminated Londo’s employment.

This isn’t the first time LPL has been accused of failing to supervise its brokers. In 2002, FINRA announced a $500,000-plus award (Case Number: 01-05344) in favor of an investor who claimed the company failed to supervise one of its independent brokers, which ultimately caused the claimant to suffer substantial financial losses.

In 2008, LPL Financial and a former broker lost another arbitration claim - this one totaling $1.8 million. The claim alleged that LPL and a former broker, Michael McClellan, violated state and federal securities laws, committed fraud, breached fiduciary duties and made unauthorized trades, among other violations.

As reported July 3, 2009, in the Wall Street Journal, LPL was formed in 1989 through the merger of Linsco Financial Group Inc. and Private Ledger Financial Services Inc. Since then, LPL has experienced explosive growth. It is now the fifth-largest brokerage firm in the United States, with 12,294 financial advisors. The company has headquarters in Boston and San Diego.

One of the key attractions of companies like LPL Financial may have to do with money: Brokers at LPL get to keep 80% to 95% of commissions on their trades, compared with 40% or less at bigger brokerage firms, according to the Wall Street Journal article.