Brokers Charged in Elderly Fraud Cases
The SEC has charged a broker based in Roanoke, Va., with defrauding elderly customers by stealing their funds for her personal use and falsifying their account statements to cover up her fraud.
According to the SEC’s complaint filed in U.S. District Court for the Western District of Virginia, Donna Jessee Tucker siphoned $730,289 from elderly customers and used the money to pay for such personal expenses as vacations, vehicles, clothes, and a country club membership.
Tucker ensured that the customers received their monthly account statements electronically, knowing that they were unable or unwilling to access their statements in that format, the SEC said July 31.
Some of the victims were legally blind, the agency noted.
The SEC further alleged that Tucker engaged in unauthorized trading and other financial transactions while making misrepresentations to customers about their investment accounts and forging brokerage, banking, and other documents.
When asked if any of the victims were members of credit unions, SEC spokeswoman Judith Burns told CU Times Wednesday, “If it wasn't in our complaint, we couldn't comment.”
In a parallel action, the U.S. Attorney’s Office for the Western District of Virginia announced criminal charges against Tucker.
Tucker agreed to settle the SEC’s charges and disgorge the $730,289 in ill-gotten gains either in the criminal case or the civil case, according to the SEC.
The agency said she also consented to the entry of an order permanently enjoining her from violating Section 17(a) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The settlement is subject to court approval.
Meanwhile, in the same state of Virginia, the SEC also obtained a final judgment requiring a Richmond-based financial services holding company, a subsidiary brokerage firm, and their CEO to pay nearly $70 million as the outcome of an October 2013 trial that found them liable for fraud.
The SEC complaint filed against AIC Inc., Community Bankers Securities LLC, and Nicholas D. Skaltsounis alleged that they conducted an offering fraud while selling AIC promissory notes and stock to numerous investors across multiple states, many of whom were elderly brokerage customers.
They misrepresented and omitted material information about the investments when pitching them to investors, including the safety and risk associated with the investments, the rates of return, and how the proceeds would be used by AIC, the SEC. In reality, AIC and its subsidiaries were never profitable, and Skaltsounis and the companies used money raised from new investors to pay back principal and returns to existing investors.
Credit unions have long led efforts to stamp out fraud against elderly citizens.
At an April press conference on the issue, the $18 million Catholic United Financial Credit Union in St. Paul, Minn., urged other credit unions and banks to be on the lookout for suspicious activities. Officials with the CFPB, AARP Minnesota and the local sheriff’s office were also in attendance at the conference.
In a Sept. 23, 2013 letter to credit unions, NCUA Chairman Debbie Matz reminded federally insured credit unions they can alert authorities if they suspect an older member is the victim of financial abuse or exploitation without violating the member’s privacy.
“Research suggests financial exploitation is the most common form of elderly abuse,” Matz said at the time. “Older adults can become targets of financial exploitation by scam artists, shady contractors, dishonest financial advisors or even trusted friends or family members.”