by Howard Haykin

A broker with Allstate Financial Services (and later Merrill Lynch) had an ongoing ‘relationship of trust and confidence’ with an elder widow that began with him helping her organize all of her late husband’s finances. Over time, the broker induced the widow to provide him access to her credit cards by having her add his name to the accounts and then having cards issued in his name. The broker next obtained Power of Attorney (”POA”) over the widow.  The broker also got her to pay $850 for the financial advice he was providing – which he collected by accessing the widow’s account on-line and transferring that balance to his personal checking account.

WHAT WENT WRONG.    The broker had already violated his employers’ policies by failing to tell them about his dealings with the widow and, in particular, that he had obtained a POA, credit cards, and an $850 stipend. But the broker didn’t stop there. The broker used the widow’s credit cards to pay for over $2,500 in personal expenses. He and his wife took a trip to Madrid, Spain that was largely financed with those cards – on cash advances, airline and hotel charges, museum fees, perfume purchases, and tickets for a flamenco dance show. Back home in Corpus Christi, TX, the broker also paid for spa treatments, sporting goods purchases, and credit score fees with the widow’s credit cards.

THE FINANCIAL FRAUD ENDS.    The widow never authorized the broker to use her credit cards for his personal expenses. So, after receiving fraud alerts about unauthorized activity in her credit cards, she went straight to a Bank of America branch and complained to bank management. That same day, Bank of America removed the broker from the credit card accounts. The very next day, in an effort to cover up his purchases, the broker visited a Bank of America branch and paid off those credit card charges with funds from the widow’s bank account. 

[For further details, click on … FINRA Case #2016051814301.]