Category Archives: Rhonda Breard, former employer: ING

Medical Capital Holdings. Securities America. Behringer Harvard REIT I. Main Street Natural Gas Bonds. Tim Durham. Fannie Mae, Freddie Mac Preferred Shares. Goldman Sachs CDO Fraud. Lehman Structured Notes. These names were among the hot topics that dominated the investment headlines in 2010.

In January, Securities America was accused by Massachusetts Secretary of State William Galvin of misleading investors and intentionally making material misrepresentations and omissions in order to get them to purchase private placements in Medical Capital Holdings. Medical Capital was sued by the Securities and Exchange Commission (SEC) in July 2009 and placed into receivership. Its collapse ultimately created about $1 billion in losses for investors throughout the country.

According to the Massachusetts complaint, as well as other state complaints that would follow, many investors were unaware of the risks involved in their Medical Capital private placements. They also didn’t know about the crumbling financial health of the company. Securities America, on the other hand, was fully aware of both, regulators allege.

In February, non-traded real estate investment trusts like the Behringer Harvard REIT I became front-page news, as investors filed complaints over what their brokers did and did not disclose about the investments. In the case of Behringer and other non-traded REITs, including Cornerstone, Inland Western and Inland American, investors found themselves blindsided after discovering their investments were high-risk, illiquid and contained highly specific and lengthy exit clauses.

In March, rogue brokers Bambi Holzer faced charges in connection to sales of private placements in Provident Royalties. Like Medical Capital Holdings, the SEC charged Provident with securities fraud, citing $485 million in private securities sales. In March 2010, the Financial Industry Regulatory Authority (FINRA) formally expelled Provident Asset Management LLC, the broker-dealer arm of Provident.

Ponzi schemes were big news, as well, in March. Heading the list of offenders was Rhonda Breard, a former broker for ING Financial Partners. State regulators contend Breard scammed nearly $8 million from investors in a Ponzi scheme that allegedly had been going on since at least 2007.

In April, Goldman Sachs and its role in the financial crisis faced new scrutiny by Congress. Internal emails became the driving force behind the interest. Eventually, charges were filed by the SEC over a synthetic collateralized loan obligation – Abacus 2007-ACI – that produced about $1 billion in investor losses. Goldman later reached a settlement with the SEC, paying a $550 million fine. The fine remains the biggest fine ever levied by the SEC on a U.S. financial institution. Goldman also acknowledged that its marketing materials for Abacus contained incomplete information.

In May, FINRA stepped up its own scrutiny of non-traded REITs. On its watch list: Behringer Harvard REIT I, Inland America Real Estate Trust, Inland Western Retail Real Estate Trust, Wells Real Estate Investment Trust II and Piedmont Office Realty Trust. In particular, FINRA began to probe the ways in which broker/dealers marketed and sold non-traded REITs to investors.

In June, 49 broker/dealers found themselves named in a lawsuit involving sales of Provident Royalties private placements. The lawsuit, filed June 21 by the trustee overseeing Provident – Milo H. Segner Jr. – charged the broker/dealers of failing to uphold their fiduciary obligations when selling a series of Provident Royalties LLC private placements. Among the leading sellers of private placements in Provident Royalties were Capital Financial Services, with $33.7 million in sales; Next Financial Group, with $33.5 million; and QA3 Financial Corp., with $32.6 million.

In July, Fannie Mae and Freddie Mac were back in the news, as a rash of investors began filing lawsuits and arbitration claims over preferred shares purchased in the companies. In 2007 and 2008, investment firms like UBS, Morgan Stanley, Citigroup, Merrill Lynch and others sold billions of dollars in various series of preferred stock issued by the two mortgage giants. According to investors, however, the brokerages never revealed key information about the preferred shares, including the rapidly deteriorating financial health of Freddie Mac and Fannie Mae and the fact that both companies had a growing appetite for risky lending, excessive leverage and investments in toxic derivatives.

In August, new issues regarding retained asset accounts (RAAs) came to light. Specifically, RAAs allow insurers to earn high returns – 4.8% – on the proceeds of a life insurance policy. Meanwhile, beneficiaries often receive peanuts via interest rates as low as 0.5%. Adding to the issues of RAAs is the fact that the products are not insured by the Federal Deposit Insurance Corp. (FDIC).

In September, new concerns about the suitability of leveraged, inverse exchange-traded funds (ETFs) for individual investors began to crop up. Among other things, regulators cautioned investors about the products and stated that they may be inappropriate for long-term investors because returns can potentially deviate from underlying indexes when held for longer than single trading day.

In October, the ugliness associated with some non-traded REITs gained new momentum. A number of non-traded REIT programs eliminated or severely limited their share repurchase programs. At the same time, some non-traded REITs continued to offer their shares to the public. As of the first quarter of 2010, this group included Behringer Harvard Multi-family REIT I, Grubb & Ellis Apartment REIT, Wells REIT II, and Wells Timberland REIT.

In November, sales of structured notes hit record highs of more than a $42 billion. Leading the pack in sales of structured notes was Morgan Stanley at $10.1 billion, followed by Bank of America Corp., which issued $7.9 billion.

Because of their complexity, structured products are not for those who don’t fully understand them. Moreover, once an investor puts money into a structured product, he or she is essentially locked in for the duration of the contract. And, contrary to promises of principal by some brokers, investors can still lose money – and a lot of it – in structured notes.

Case in point: Lehman Brothers Holdings. Investors who invested in principal-protected notes issued by Lehman Brothers lost almost all of their investment when Lehman filed for bankruptcy in September 2008.

Also big news in November 2010: Tim Durham and Fair Finance. The offices of Fair Finance were raided by federal agents of Nov. 24. On that same day, the U.S. Attorney’s Office in Indianapolis filed court papers alleging that Fair Finance operated as a Ponzi scheme, using money from new investors to pay off prior purchasers of the investment certificates. According to reports, investors were defrauded out of more than $200 million.

The effects of Lehman Brothers’ bankruptcy continued to unfold in December 2010 for many investors who had investments in Main Street Natural Gas Bonds. Main Street Natural Gas Bonds were marketed and sold by a number of Wall Street brokerages as safe, conservative municipal bonds. Instead, the bonds were complex derivative securities backed by Lehman Brothers. When Lehman filed for bankruptcy protection in September 2008, the trading values of the Main Street Bonds plummeted.

Many investors who purchased Main Street Natural Gas Bonds did so because they were looking for a safe, tax-free income-producing investment backed by a municipality. What they got, however, was a far different reality.

Former ING Financial broker Rhonda Breard is trading her swanky professional suits for prison garb. After pilfering clients out of $12 million, a federal judge has sentenced Breard to six years and eight months in prison.

The former chief executive officer of Breard and Associates Wealth Management in Kirkland was initially charged on March 10 to one count of mail fraud in connection to an investment scheme that defrauded clients out of millions. Breard later admitted she concealed the scheme by giving her clients fake account statements that showed investments in a variety of phony financial and insurance products.

The Financial Industry Regulatory Authority (FINRA) barred Breard from the securities industry in March.

After stealing from her clients, Breard allegedly used the money to purchase extravagant homes, jewelry and more than two dozen vehicles. In February, Breard tried to commit suicide, presumably because authorities were onto her fraud following a surprise audit by ING.

During Breard’s sentencing, several of the victims she defrauded were present. One of the victims was Shelly Heath, who had invested with Breard for 25 years. Gone from her account were her retirement savings and money for her children’s college education fund.

Another of Breard’s victims was an autistic man who lost his entire savings while working as a janitor and other small jobs.

As for Breard, she blamed her actions on greed and the need to appear wealthy.

Rhonda Breard, the former Seattle broker for ING Financial who made a name for herself by dispensing investment advice via television infomercials and seminars, will plead guilty to mail fraud. Breard is accused of stealing $9.4 million from her clients.

As reported April 2 by the Associated Press, prosecutors are seeking to have Breard forfeit several properties, cars, boats, watercraft and jewelry.

Breard has a shady past when it comes to her professional conduct. In 1991, she resigned from Smith Barney over allegations of unauthorized trading in clients’ accounts. One year later, she faced similar claims, according to records with the Financial Industry Regulatory Authority (FINRA), and eventually paid a $15,000 fine. In 1993, Breard settled an investor complaint for $74,493 while employed at Prudential Securities,

The Washington State Department of Financial Institutions, the Washington State Office of the Insurance Commissioner, and the FBI continue to investigate Breard’s alleged fraud.

If you are a current or former investor with Rhonda Breard and/or Breard & Associates and Wealth Management, we encourage you to contact Maddox Hargett & Caruso P.C. Your case may be eligible for recovery.

It’s official – former ING Financial broker Rhonda Breard has been permanently barred from the securities industry by the Financial Industry Regulatory Authority (FINRA). The Washington State investment advisor is accused of stealing $8 million from clients.

Breard neither admits nor denies the charges, but “consented to the entry of FINRA’s findings,” according to a statement by FINRA.

Breard currently is facing federal charges, as well as civil lawsuits. If convicted on the federal charges, Breard faces a sentence of up to 20 years in prison and a fine of up to $1 million.

Breard’s scheme came to light during a surprise visit from an ING auditor to her offices at Breard & Associates Wealth Management. As reported March 11 by Investment News, the auditor uncovered a locked file cabinet in the office. Contents from the cabinet purportedly revealed that Breard had misappropriated money from her clients.

Meanwhile, some of Breard’s clients have invested with Breard for more than 20 years. A few years ago, they reported that Breard began asking them to liquidate their accounts and write her checks for Breard to invest in new accounts.

Maddox Hargett & Caruso P.C. is investigating investors’ allegations against Rhonda Breard and ING Financial. If you suffered investment losses through Breard, contact us with your story. You may have a claim for recovery.

To borrow from Bob Dylan, ‘the times they are-a changin’ for Kirkland securities broker Rhonda Breard. Breard, a former broker for ING Financial Partners, faces 20 years in prison and a $1 million fine for the single count of mail fraud that federal prosecutors charged her with last week.

State regulators estimate that Breard may have scammed nearly $8 million from investors in a Ponzi scheme that allegedly had been going on since at least 2007.

According to prosecutors, instead of placing investors’ money in insurance and financial investments, Breard used the funds for her own profit and, in turn, allegedly gave phony statements to clients.

On March 10, in what is likely to be a slew of future lawsuits against Breard, James and Shelley Heath sued the disgraced broker, alleging they lost their life savings to her scam. The Heaths also sued one of Breard’s associates, Colleen Brown, and Breard’s former employer, ING Financial Partners.

The lawsuit, which was filed in U.S. District Court in Seattle, claims ING licensed Breard and Brown and then failed to properly supervise them. The suit also alleges that ING has a history of failing to supervise brokers, paying “huge fines and/or state-ordered restitution to clients” over the years.

KING 5 News is reporting that ING Financial Partners is quietly looking for offers to settle with clients who were allegedly bilked out of some $8 million by former ING broker Rhonda Breard.

Breard is facing fraud charges by the Washington State Department of Financial Institutions and the Washington State Attorney. In February, Breard, who owns Breard Associates and Wealth Management in Kirkland, was fired from ING. She is scheduled to appear in federal court to face a preliminary hearing sometime next week.

Meanwhile, civil actions are just beginning for Breard. In one lawsuit, allegations also are being levied against ING Financial Partners for failing to properly supervise Breard.

According to a KING 5 News story, a second person, Colleen Brown, is cited for her alleged participation in Breard’s scheme. Brown worked in Breard’s office and is alleged to be the individual who sent out false monthly statements to Breard’s clients.

Rhonda Breard’s conscience may have finally caught up with her. The former ING investment broker has been under investigation for fraud on allegations that she bilked clients out of millions of dollars. On March 2, the disgraced investment advisor and TV personality reportedly tried to take her life.

Breard’s alleged actions came to the attention of regulators in February 2010 after she was fired by ING Financial Partners for reportedly “altering customer statements.” On March 10, federal prosecutors officially charged Breard, 47, with mail fraud. According to the criminal complaint, Breard accepted millions of dollars from investors, telling them that their money would be placed in a variety of financial and insurance products.

Instead, investigators say she used the money for her own expenses and mailed phony statements to clients.

A preliminary investigation by the Washington State Department of Financial Institutions (DFI) indicates that investors could be out more than $8 million. According to the DFI, Breard’s ability to act as a broker was terminated in nine states, including Washington and Oregon, on Feb. 10.

Breard, who also goes by the names Dean Tucker and Rhonda Lee Dean, is the owner of Kirkland-based Breard Associates and Wealth Management.

Breard isn’t the only one facing scrutiny. As her supervisor, ING also may also be held liable for investors’ financial losses because of its alleged supervisory failures.

Some of the investors affected by Breard’s alleged scheme include fifth-grade teacher Sandee Gren, who had plans to retire in the near future. Now, with half of her retirement account, roughly $300,000, gone, those plans are in peril.

“I stood in that woman’s office pouring my heart out about how I’ve been a single parent, how I’d just lost my daughter and I needed to know what to do with my stocks,” says Gren.

Records with the Financial Industry Regulatory Authority (FINRA) show a long and lengthy list of complaints and enforcement actions against Breard during the course of her investment career.

In 1991, Breard was allowed to resign from Smith Barney because of unauthorized trading of clients’ accounts. In 1992, she faced similar allegations and was fined $15,000. In 1993, while employed at Prudential Securities, Breard settled a complaint against her for $74,493.

The Washington State Department of Financial Institutions, the Washington State Office of the Insurance Commissioner, and the FBI are continuing their investigation of Breard.

Maddox Hargett & Caruso P.C. is launching its own investigation into investors’ allegations against Rhonda Breard. If you suffered investment losses through Breard, contact us with your story. You may have a claim for recovery.