We've all heard stories of physical rape. Just watch Law and Order. Here's one about a couple in their golden years alleging "financial` rape," a sad event that will soon go to arbitration.
Here's the story. In th early 1950s, Dan Rogas played professional football, first for the Detroit Lions and then the Philadelphia Eagles. As an offensive lineman, needless to say, he took his fair share of knocks. Now, some 50 years later at age 84, he and his 79-year-old wife, Betty, who live in Beaumomt, Tx., are experiencing even worse knocks.
In brief, the Rogases, like Greece, are in financial turmoil, having given $500,000 of their retirement savings to a broker a long-time friend who gave them the very worst kind of investment advice. It was almost as bad as investing with Bernard Madoff.
In brief, the broker, Thurman Ray "Bo" Crawford, who plied his trade at Securities America, a subsidiary of investment giant Ameriprise Financial (formerly American Express Financial Advisor)--which manages about $372 billion of assets and boasts more than two million clients--convinced the Rogases in early 2007 'to dramatically alter their portfolio. His recommendation: to sell the conservative stocks and bonds they held in a UBS account and invest the money instead in a private placement, essentially notes issued by a medical receivables company, Medical Capital, that Securities America was promoting.
Unfortunately, the Rogases heeded his advice. As they later discovered, friends like Crawford are as desirable as cancer. Medical capital is now in receivership. It turned out to be a massive fraud, ripping off investors nationally for about $1 billion. In July of 2009, the Securities and Exchange Commission stepped in, filing a complaint in which it alleged fraud by Medical Capital.
"We were financially raped," says Rogas, who notes he was assured by Crawford it was a "safe investment." Rogas, who retired in the late 1980s, says his nest egg has been destroyed. Further, he observes, if he should need money for medical expenses for his wife, a former schoolteacher, or himself, or to help out if any emergency befalls his three children, it's no longer there. He doesn't recall the precise returns Crawford promised him on the investment, but Rogas seemed to recollect the broker said it would be 10%, either annually or in total.
"It's disgraceful," says the attorney for the Rogases, Thomas Ajamie, the managing partner of Houston-based AJAMIE LLP, which filed a lawsuit on December 23 against Ameriprise, Securities America and others, alleging negligence in recommending such a risky and illiquid investment to an elderly couple. Ajamie contends the defendants failed to do proper due diligence and put the Rogases into such a product because it generates higher commissions.
Crawford had been named as a defendant in the suit, but has been temporarily dismissed from it to enable the law firm to focus on Ameriprise, the nation's fourth largest financial advisory firm, Securities America and others. .As one of the AJAMIE firm's attorneys, Jason Braun, put it, "Crawford is not off the hook. We may sue him again." Crawford's attorney, Cindy Moulpon, says her client denies any wrongdoing.
The obvious question: why would Securities America pitch such an obviously risky investment to an elderly couple in their retirement? Alas, the comainy isn't talking. Ameriprise's general counsel, John Junek, refused to respond to several calls seeking comment.
Unfortunately, the story could have a sad ending for the Rogas family because the matter will be going to arbetration. Since such arbitration is sponsored by the securities industry, the panel, as Ajamie explains, invariably favors the industry. Moreover, he points out, even if the Rogases were to get their money back, which is highly unlikely, they would still come out with less than they lost because of the accompanying legal fees.
What do you think? E-mail me at Dandordan@aol.com