Posted in: FINRA | Ponzi Schemes | Greedy Brokers | Breach of Fiduciary Duty |
At the beginning of this year, disgraced securities broker Rhonda Breard was a minor celebrity in the Seattle area, regularly providing investment tips on television infomercials, radio programs and public functions. On Wednesday Breard reportedly fought back tears as she appeared before a federal judge, after more than 20 former clients accused her of embezzling $8 million of their money.
Breard had owned Breard and Associates, a firm operating in nearby Kirkland, Washington that was permitted to sell securities through ING Financial Partners since 2002. Her alleged fraud only came to light after an ING Financial internal auditor made an unannounced visit to her office sometime in February, according to the Seattle Times. When a locked file cabinet inside the office was searched, the auditor discovered proof suggesting that Breard had embezzled client money.
In lawsuits filed over the past month, clients believed Breard had spent their investment money on multi-million dollar homes in upstate Washington, boats, eight cars, six snowmobiles, a motorhome, and an extensive jewelry collection. Some clients claim they have lost their life savings-the first lawsuit filed against Breard alleged $900,000 in losses. Other clients were long-term customers of Breard, and had trusted her for decades.
In a 2008 interview with 425 Magazine, when asked what drives her ambitions, Breard responded, “Shopping at Nordstrom of course!!!” When she was similarly asked what motivated her, the response was a bit less predictable: “Helping others in any way I can - I have been blessed in the path that I have chosen and my hard work has paid off and afforded me a wonderful life, so when I can make a difference in someone’s life, it fuels my spirit!”
After Breard learned she was being terminated by ING Financial on February 10 following the allegations, the former host of the investment television show, “Help Me Rhonda” intentionally hid herself from the public. Her office was shuttered, her Web site informed readers it was under construction, and her whereabouts were unknown leading up to her arrest.
Breard knew she was facing likely prosecution, so on February 17 she attempted to sell her large collection of gold and silver jewelry to a local pawnshop. The suspicious pawnshop owner denied her request after a google search of her name.
In addition to addressing their frustrations, some former clients have already taken legal action against ING Financial for failing to supervise Breard during her nearly eight years of employment. According to FINRA’s disciplinary record of Breard, the broker was forced to leave Smith Barney in 1991 for trading on a customer’s account without permission. In addition to fielding multiple customer complaints during that time, she was fined $100,000.
As the FBI and other federal authorities are still in early stages of their investigation regarding Breard, they have yet to conclude exactly how much assets were taken and from which clients. Breard was licensed to sell securities in Arizona, Michigan, Nevada, New Mexico, North Carolina, Oregon, Washington, West Virginia, Washington, and Wyoming, and it is too early to determine how many people could have been affected.
Breard is criminally charged with multiple counts of mail fraud, punishable to up to 20 years in prison, because prosecutors believe she sent falsified statements to customers in order to cover up evidence of her Ponzi scheme. Breard is currently free on bond from the federal judge, as long as she does not attempt to transfer any of her assets to other accounts.
Once again, investors were betrayed by the last person they’d suspect-someone they had relied on for their financial futures, someone they believed to have scruples and expertise. Breard had a platform to reach thousands of investors, and she flaunted her lifestyle to appear successful. The New York Times said Breard began asking some clients a few years ago to liquidate existing accounts and write her checks that she would invest in better accounts, but still managed to avoid suspicion.
But investors should not disregard ING’s Financial’s involvement in Breard’s scheme. Even if the extent of ING’s wrongdoing and involvement is currently unknown, every broker-dealer firm is responsible for supervising its brokers. Even though Breard was operating in her own waterfront office in Washington rather than an ING branch office, she should be monitored the same as all the firm’s 10,000 total employees.
When investors put their faith - and money - in Breard’s “investments,” they were also trusting a firm ranked the eighth-largest financial firm in the world, according to Forbes Magazine.
If you have invested with ING or Rhonda Breard, immediately check your financial statements for any inconsistencies or errors. If you suspect any financial wrongdoing, contact us for a free consultation of your case.
