According to various reports, a broker formally affiliated with Morgan Stanley Smith Barney, LLC, Berthel Fisher & Co., and LPL Financial was recently arrested in Oregon for allegedly stealing $584,000 from three investors.
In a statement by the City of Eugene Police Department, it is said that the ex-broker, James Scott McKee, was charged with four counts of aggravated theft in the first degree.
Apparently James Scott McKee’s victims included an 81-year-old retiree and a local church.
In a FINRA regulatory complaint, FINRA has also alleged that in April 2007 Mr. McKee persuaded an LPL client to invest $400,000 in a real estate venture and that Mr. McKee did not notify LPL or get the firm’s approval for the venture (such a practice is calling “selling away” and LPL may still be liable for this transaction as a result of its supervisory responsibilities for its agent).
The FINRA complaint further alleges that after the client had a heart attack, she incurred significant medical expenses and contacted Mr. McKee to get her money back. Additionally, in February 2008, Mr. McKee purportedly received two checks for $200,000 from the real estate development and converted those funds to his own use (even though he told the client the funds were still invested in the real estate development).
The police statement also states that from February 2008 to the present, Mr. McKee “committed aggravated theft by deception and fraud with respect to securities or securities business.”
Based on the reports and complaints filed, it appears that Mr. McKee’s actions included the sale of unregistered securities, the unauthorized liquidation of monies from investment accounts by a financial planner, the unauthorized deposit of those funds into the financial planner’s personal bank account and the subsequent concealment of that liquidation.
Mr. McKee FINRA Broker Report (CRD) indicates that he was affiliated with LPL from November 2002 to September 2008 and with Berthel Fisher from that point until November 2010. He then joined Morgan Stanley, where he worked until this October when he was discharged.
The FINRA complaint also alleges that Mr. McKee’s alleged victims included an owner of a small office supply company and other unsophisticated investors seeking conservative investments. Mr. McKee allegedly promised investors unreasonably high returns not supported by the underlying businesses and hid the precarious financial condition of those businesses.
The White Law Group is currently investigating the liability that Mr. McKee’s employers (LPL, Berthel Fisher, and Morgan Stanley) may have for failure to adequately supervise the actions of its agent. If you invested with Mr. McKee and have questions about your investments, please call The White Law Group’s Chicago office at 312/238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.