Sharon Schmidt of Gurnee drove a bus for a living until an accident forced her into disability. She and her husband, a computer technician, had depended on her niece’s ex-husband, Raymond Londo, to guide their investments over the years so they could retire comfortably.
But now she’s 59 and her husband Ronald is 64, and they’re broke. A half-million dollars dwindled to nothing and they fear for the future.”He said it would build up over the long haul, and I trusted him,” Schmidt said about the funds.
She said Londo even took her last $100,000 about two years ago and invested in what he called a sure thing, a company that he said had just won a big government contract to refurbish helicopters. He said she’d double her money in 18 months, she recalled.
At the end of those 18 months, Londo didn’t return her calls, or anyone’s calls, anymore. He was dead. A gunshot wound to the head, apparently by his own hand.
Londo is now the subject of several individual complaints pending before the New York-based Financial Industry Regulatory Authority, the nationwide organization that oversees brokers and brokerage firms and arbitrates complaints. At least 10 suburban victims said Boston-based LPL Financial Corp, also known as Linsco Private Ledger, should be held responsible for Londo taking their life savings or their retirement accounts – collectively about $4 million. Besides the Schmidts, other victims were mostly retirees in their 60s and 70s and residents of the Northwest suburbs, including Schaumburg, Cary, Lake in the Hills and Arlington Heights.
According to documents filed with the oversight agency, Londo used the money to fund a lavish lifestyle that included a Lake in the Hills home with a $1 million mortgage and high-end vehicles like a BMW convertible, Cadillac CTS, a Corvette and a Denali. as well as gambling sprees in the suburbs and in Las Vegas.
Public documents show that Londo either lived at or was connected to about 15 homes and apartments over the years, including in Gurnee, Palatine, Waukegan, Arlington Heights and Lake Bluff.
The victims said LPL failed to supervise Londo, a broker who worked at offices in Grayslake and Elmwood Park, and they accuse the agency of fraudulent concealment, fraud and violations of various Illinois securities and consumer protection laws. They want the federal agency to order LPL to repay more than $4 million in client losses plus attorney fees, interest and punitive damages.
LPL has not filed an official response but says that Londo’s actions occurred outside his relationship with the company.
An agency hearing on the cases involving Londo is not yet scheduled but could take place later this year, authorities said.
Specifically, the victims claim Londo operated an elaborate Ponzi scheme that led clients to think their life savings or retirement funds were invested, when he was in fact paying some investors with the investments of others and pocketing much of the rest of the money himself.
Small amounts were paid back to clients in the beginning, but this was a way to “prime the pump,” said Andrew Stoltmann, a Chicago attorney representing many of the victims. St. Charles-based attorney John Burke also is handling some of the cases, as well. The attorneys created a website (www.raylondofraudrecovery.com) to reach other victims.
Stoltmann said the total amounts paid back were less than $100,000, qualifying Londo’s actions as a Ponzi scheme under state and federal securities laws. Actions taken after these initial payments, he said, represent a conversion or theft scheme, under the law.
“Dozens of supervisory red flags were kicked up and Linsco ignored virtually every one of them,” Stoltmann said. “Even remedial actions by the brokerage firm could have prevented this scheme from taking place.”
Stoltmann said supervisors should have become suspicious of Londo’s lavish lifestyle compared to his production at LPL. Londo had luxury cars, went on multiple gambling junkets to Las Vegas on private planes, and millions of dollars were sent directly to his LPL offices. In 1997, Stoltmann said, one investment agency even obtained a judgment against Londo and later followed that up with garnishment proceedings, yet LPL failed to call the agency or any of the clients who had funds stolen, Stoltmann said.
Even though Londo was registered as an agent and representative of LPL for almost 10 years, he was not an employee, but was considered an “independent contractor-adviser” who was a limited agent of the company. He was permitted to transact purchases and sales of approved securities through LPL, said company spokesman Joseph Kuo.
“The allegations involving this individual relate to conduct that happened completely outside of his relationship with LPL,” Kuo said. “Beyond this, we cannot comment on pending legal matters.”
Stoltmann said Londo drained LPL trading accounts, life insurance policies and other investments and repeatedly lied to clients that their investments were “guaranteed.” The official complaints said he commingled investors’ funds into accounts under his own control, then spent or lost the funds.
The complaints said he gambled at local casinos and, at times, was jetted to Las Vegas by the Aladdin Casino. They also describe a variety of run-ins – including a DUI arrest in Elgin, the loss of his driver’s license, an arrest for failing to pay a marker at Aladdin Casino and a court order to get alcohol treatment – that led up to his firing from LPL in 2008.
Still, clients continued to work with him, because they weren’t aware that he had been terminated, Stoltmann said.
Sharon Schmidt said she didn’t know much about Londo, except when he was married to her niece for about five years.
“He seemed like an all-right guy and was nice and kidded around with people,” Schmidt said.
Even after her niece and Londo divorced, the Schmidts continued to invest with Londo.
“We felt comfortable with him, knowing other relatives and friends also invested with Londo,” Schmidt said.
She was never suspicious of Londo until the helicopter deal failed. The Schmidts previously had seen their funds dwindling in their account with Londo, but he promised to invest their last $100,000 in the company he said had a contract for repairing helicopters. After 18 months, the period he’d told them it would take to double their money, Schmidt called several times, but Londo never responded. She called his uncle and learned about Londo’s death months earlier at age 41.
The Lake in the Hills police department responded to a call at Londo’s residence on April 9, 2009, to find Londo’s body. He had been shot in the head. The police determined Londo’s death was “not suspicious,” and categorized it as a suicide, said Mary Frake, chief of support services. She declined further comment.
The McHenry County Coroner Marlene Lantz said she had no record of the Londo case and didn’t handle it.
Londo’s wife, Margaret Londo, was unavailable and a lawyer representing her in a bankruptcy case, Michael P. Rhoades, would not comment.
“I was shocked when I found out what was happening, about how he was taking money and using it for himself. He knew that it was our retirement money,” Schmidt said.
Sources: Daily Herald – How 10 Suburban Investors Were Duped Out of Savings by One Broker