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THE 9/11 PARASITES: CORRUPT BROKERS EXPLOIT 9/11 TRAGEDY
by Lawrence C. Melton, Esq.
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(October 15, 2007 - Monday) - [img] src=images/upload/american_flag.jpg align=left [/img] Just when you thought the culture of investment fraud couldn't get any worse, a new breed of villain emerges--the 9/11 parasite. Who says a sociopath can't give investment advice? Enter Kevin James Dunn, Jr., a broker previously employed by MetLife Securities, Inc. Mr. Dunn at 28 years of age is a rather opportunistic young fellow. Where others see national tragedy, Mr. Dunn sees a financial opportunity. Thus was the case when he came across the trusting widow of a 9/11 victim. Here is a link to the SEC Release: http://www.sec.gov/litigation/litreleases/2007lr20323.htm
Here is what happened. Mr. Dunn was friends with a widow of a Port Authority police officer who died at the World Trade Center on September 11, 2001. The widow, whose name was not released to the public, received $2 million from the September 11 Victim Compensation Fund. This is quite a lot of money, no doubt, but police officers who died trying to save lives in the world trade center were heros and their widows were deemed to receive a hero's bounty. Mr. Dunn must have decided that she had more than enough money to share, so he devised a scheme to take some for himself. (SEC Litigation Release No. 20323, Oct. 4, 2007)
Initially, the widow purchased $1.25 million in shares of some tax-exempt mutual funds through her MetLife brokerage account. She placed the rest of the money toward a MetLife annuity.
For starters, Dunn foisted about $23 thousand in fraudulent commissions when transferred the proceeds from the mutual funds to the annuity contract. But that was merely the obligatory clearing of throat before getting down to the real business.
The huge misappropriations started in 2005. Mr. Dunn fraudulently created a joint account in both their names. He then forged her signature on wire transfers from the joint account. He told her outrageous lies about the status of her investments to deceive her into providing him with blank checks. By this process, Mr. Dunn succeeded in misappropriating $248,000 from the widow. (SEC Litigation Release No. 20323, Oct. 4, 2007)
A professor of psychology at Harvard recently published a best-seller entitled, The Sociopath Next Door. It is a study on how seemingly normal people, the kind we encounter in our everyday lives, are often closet sociopaths. These people are masterful at concealing their lack of moral restraint, but in the end they always cause destruction and pain to those around them. I suggest that the danger is even more pronounced when such a person is employed to invest another individual's earnings in the stock market.
The SEC filed a civil injunctive action against Mr. Dunn in the United States District Court for the Eastern District of New York earlier this month. The United States Attorney's Office filed criminal charges. So far, Mr. Dunn has been the target and MetLife Securities has emerged unscathed. This is curious to me. The misappropriations for the most part occurred while Mr. Dunn was working as a broker for MetLife. The widow's account was with Met Life. MetLife was required to supervise and monitor the conduct of its employees, which include Mr. Dunn. Why give MetLife a free pass?
THE MORGAN STANLEY 9/11 EMAIL SCANDAL
The Kevin Dunn story comes on the heels of another news story connecting securities fraud and the 9/11 terrorist attack on the World Trade Center. On September 27, 2007, the Financial Industry Regulatory Authority (FINRA) found that Morgan Stanley failed to produce pre-9/11 emails to claimants in a large number of arbitration proceedings spanning from October 2001 through March 2005. FINRA found that Morgan Stanley made statements at numerous arbitration proceedings that those emails had been destroyed in the 9/11 terrorist attack on the World Trade Center. This was apparently a lie. "In fact, MSDW possessed millions of pre-9/11 emails that had been restored to the firm's system shortly after Sept. 11, 2001 using backup tapes." (FINRA PRESS RELEASE, September 27, 2007)
The discovery process requires that brokerage firms to search diligently for, and provide in a timely manner, certain documents required in arbitration proceedings and regulatory investigations. As you would guess, the brokerage firms--especially the guilty ones--are reluctant to produce the required documents. They have devised a veritable encyclopedia of ways to stonewall the discovery process. But for sheer inventiveness and imagination Morgan Stanley takes the prize. They had the gall to claim that the relevant documents were destroyed in the September 11, 2001 terrorist attack on the World Trade Center!!! It is uncertain whether Morgan Stanley's comments were intentional lies or merely negligent misstatements. If indeed Morgan Stanley made the statements in a knowing and intentional manner, such conduct was shameful. I don't think the American public will respond kindly to a brokerage house exploiting a national tragedy in this manner. The implication is that Morgan Stanley seized upon 9/11 in a not-so-clever maneuver to suppress documents in an unrelated legal proceeding.
The total fine was $12.5 million. FINRA required Morgan Stanley to pay a $3 million fine, and ordered Morgan Stanley to deposit an additional $9.5 million into a fund to pay arbitration claimants who were screwed over by the discovery failures. The fund administrator will identify and notify the eligible arbitration claimants. Eligible claimants in the email aspect of the case may receive $3,000 to $5,000. Eligible claimants who were denied required supervisory materials may receive $1,500 to $2,500. (FINRA PRESS RELEASE, Thursday, September 27, 2007).
For detailed information about which claimants are eligible what fund payments go to the following link:
FINRA Investor Claims Funds Restitution
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