Senior Citizens – Beware!

As Mike Tyson so eloquently asserted once, “everyone has a plan until they get punched in the mouth.” Iron Mike must have felt like he was punched in the mouth during the sentencing of his former financial planner in federal court last week. Mike Tyson’s broker and investment advisor was charged with conversion and stealing in excess of $1 million from a number of former professional athletes.

Brian J. Ourand was charged with wire fraud. In his plea deal with Federal prosecutors he confessed to stealing client funds by forging checks made payable to himself and depositing the checks into his personal accounts. Ourand, acting as the fiduciary and financial advisor to these individuals, was able to carry out this elaborate scheme from early 2006 through July 2011. Ourand was sentenced to 33 months in prison and ordered to pay restitution to his clients, including Mike Tyson, in the amount of $1,002,390.

Regrettably, conversion schemes and illegal wire transfers targeting unsuspecting clients have occurred too often. Victims are usually not former heavy weight champions, but often senior investors. For instance, in June 2014, FINRA fined Fidelity for failing to detect a financial advisor who was setting up accounts at Fidelity despite the fact that the broker was not even employed at the broker dealer. FINRA found that from August 2006 until May 2013, the broker was running a conversion scheme by targeting former customers from another brokerage firm from which she had been fired. As with Ourand, this Fidelity scheme lasted an extraordinary length of time, from August 2006 to May 2013. In June 2014, the broker pled guilty to wire fraud, was sentenced to 15 years in prison and was ordered to pay more than $2 million in restitution to her victims. FINRA also fined Fidelity $500,000 and ordered the firm to pay nearly $530,000 in restitution to 9 investors, of which 8 were senior citizens.

As can be seen from these two instances, for brokers and financial advisors, the cost for conversion is steep – if they’re caught. In addition to the potential for jail time, the broker also faces restitution costs and disgorgement of all funds taken from clients, fines, legal fees, and the certainty of being barred by FINRA from the securities industry. For investors, the key is to regularly review monthly statements which detail all trading, deposits and withdrawals. For customers who grant their financial advisors discretionary authority to execute trades, the ability to detect fraudulent activity can be extremely problematic, especially for senior citizen investors.

If you discover transactions in your account that you don’t recognize, or if you have questions concerning the handling of your account, contact the securities attorneys at Lubiner, Schmidt & Palumbo for a consultation.