Bloomington, Indiana Financial Advisor Sentenced to Prison for Elder Fraud
Michael Eric Sallee pled guilty to one count of mail fraud in federal court in April 2017 and was recently sentenced to 33 months in federal prison. Sallee admitted to defrauding a longtime client and family friend of nearly $1.2 million.
The client, formerly a client of Sallee’s father, lived in Madison, IN. Sallee, also a CPA, began managing her financial affairs in 2003. The victim, a widow, had received funds from the sale of her deceased’s husband’s business after his death.
Sallee became registered as a financial advisor in 2014. He worked in Bloomington at New England Securities from August 2014 to January 2015, at MSI Financial Services, Inc. from January 2015 until March 2017 and at MML Investor Services LLC from March 2017 until he was discharged in April of this year.
His scheme began in 2003. He forged the client signature on checks and made unauthorized transfers from her banking and investment accounts a total of 98 times, according to court filings. His scheme continued until 2013.
Sallee spent he money he stole on several vacations, restaurant meals and retail purchases.
His scheme unraveled when he provided fraudulent account statements to the victim and her children. The children questioned the accuracy of the statements, which was the beginning of the end for Sallee. The FBI’s later investigation showed that the statements were fabrications on Sallee’s part.
Unfortunately, the victimization of elderly clients continues. FINRA and numerous state regulatory agencies have set up special programs or initiatives to prevent the financial abuse of the elderly.
FINRA has taken extra precaution in assisting elderly investors who are more prone to being financially exploited by their broker. Robert W. Cook, FINRA President and CEO has stressed that more protection for senior investors is needed. He pointed to the FINRA Securities Helpline for Seniors, which since its inception on April 20, 2015, has fielded more than 8,600 calls, recovering over $4.3 million in voluntary reimbursements from firms to customers.
FINRA responded by recently issuing Regulatory Notice 17-11 which has two steps that FINRA says are key to ensuring seniors are protected. Regulatory Notice 17-11 requires that broker dealers and firms make reasonable efforts to obtain the name and contact information for a trusted contact person for the seniors account. Second, firms will be permitted to place a temporary hold on a disbursement of funds or securities when there is reasonable belief of financial exploitation.
The second protection is intended to provide a safe harbor for broker dealers and firms to investigate cash disbursements to seniors to make sure they are legitimate. What exactly constitutes a “reasonable belief of financial exploitation” remains to be seen.
The Regulatory Notice will go into effect on February 5, 2018.
If you have questions or concerns regarding the handling of your account, or the account of an elderly relative, contact the securities attorneys at Lubiner, Schmidt & Palumbo