Stoltmann Law Offices has represented dozens of investors in cases where financial advisors have exploited our elderly clients or invested their money in Ponzi schemes. All too often, we’ve found in our practice that brokers take advantage of elderly clients, who may exhibit mental incapacity due to aging. Many of these clients trust their advisors, who sell them inappropriate, high-risk investments or outright fleece them.
Recently, former LPL financial advisor Bradley A. Goodbred was charged with 23 felonies: 10 counts of financial exploitation of an elderly person; two counts of financial exploitation of an elderly person; seven counts of theft and four counts of theft (Class 2 Felony), according to police. Goodbred’s arrest stemmed from a 2021 investigation into his alleged theft of $1.3 million from an elderly client with dementia. In addition, the Securities and Exchange Commission (SEC) charged Goodbred with stealing from his client in Sept. 2021. He is accused of using his client’s funds for “his personal and business expenses.” Of course, Mr. Goodbred is presumed innocent until proven guilty beyond a reasonable doubt.
According to the SEC, Goodbred worked as a registered representative and investment advisor representative for LPL Financial in the firm’s Roselle, Illinois, office. LPL terminated Goodbred on Jan. 13, 2021, for using an “unapproved power of attorney to facilitate distribution of customer funds to a real estate company representative,” according to a disclosure on his FINRA BrokerCheck report.
The SEC complaint alleged that, from at least 2012 to 2020, “Goodbred solicited one of his clients, who was 97 years old at the time of the SEC complaint, to send him money to make purported investments in real estate investment trusts on her behalf and to transfer the money to one of his businesses,” according to ThinkAdvisor.com.
The complaint also alleged that, “to fund some of the purported investments, the client, with the advice and approval of Goodbred, sold securities in her account and transferred the proceeds to Goodbred. But Goodbred didn’t use the client’s money to make investments in REITs or any other investments on her behalf. Rather, he used the client’s funds for his personal expenses and business expenses unrelated to any purported investments, according to the SEC. Those personal expenses included credit card debt for himself and his wife, as well as income taxes and auto loans,” the SEC complaint said.
LPL Financial was also involved in failing to supervise a broker who was engaged in a Ponzi scheme. LPL Financial agreed to a censure and a $150,000 fine imposed by FINRA, the US securities industry regulator, “for lapses in supervising one of its brokers. The firm ignored red flags about the undisclosed outside business activities of the broker, who was previously terminated and has been barred from the industry,” Finra said.
The broker, Rhett T. Bedwell, “had transferred from September 2018 through August 2019 customer funds to third parties with which he was associated and that were linked to a Ponzi scheme,” according to the FINRA letter.
Brokerage firms and investment advisors are legally required by regulators to monitor what their brokers are selling – their investments must be vetted and authorized by the firms – and have an obligation to investors to fully reveal true risk and return information about the vehicles sold. Broker-dealers and advisors are also required to fully evaluate all of the investments they are selling to determine if they are legitimate and suitable for their age and risk tolerance. If the investments are inappropriate, brokers and firms can be held accountable.
If you invested with a financial advisor and lost money as a result, you may have a claim to pursue through FINRA Arbitration. Please contact Stoltmann Law Offices, P.C. at 312-332-4200 for a free, no obligation consultation with a securities attorney. Stoltmann Law Offices is a contingency fee law firm which means we do not get paid until you do!