September 13, 2013
Ya got yer little ol' lady. And she's in a nursing home. Ya got yer local church. How do all those things come together into one seamy Wall Street regulatory case? Ahhh, now you're just going to have to read on.
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Craig Thomas Podosek submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Craig Thomas Podosek, Respondent (AWC 20130369231, September 11, 2013).
Podosek became a registered independent contractor at Cetera Financial Specialists, LLC f/k/a Genworth Financial Securities Corporation (the "BD") in October 2005 and remained there until his September 10, 2012, termination.
Podosek was the sole proprietor of Podosek Accounting Services ("PAS"), from which he provided tax preparation and bookkeeping senrices, payroll reporting, Form W-2 preparation and related services. Also, Podosek also sold investment products to certain of his customers through PAS.
Sometime around 2003, a 76-year-old individual (not a client of the BD) hired Podosek to prepare her tax returns and he provided that service until 2012. Approximately June 30, 2010, Podosek was granted a Power of Attorney for this individual, who by now was 83 and living in a nursing home. The POA vested Podosek with the tasks of paying the individual's household, insurance and nursing home bills. On a weekly basis, Podosek visited her at the nursing home to discuss which bills needed to be paid, and during those meetings, the individual authorized the necessary payments.
Between May 2011 and September 2011, without the individual's knowledge or authorization, Podosek allegedly deposited $300,000 into his personal and business accounts via four checks from two of the individual's IRA accounts.
A Higher Authority?
Podosek was a member of a local church, and at the pastor's request, he handled the church's finances, which included making deposits, withdrawals, and paying bills. Without the church's knowledge or authorization, between April 2008 and January 2009, Podosek allegedly converted about $200,000 from the church's funds for his own use and benefit.
SIDE BAR: According to online FINRA records as of September 13, 2013, Podosek was charged on August 10, 2012, with Grand Larceny in the Second Degree (Felony) in Oneida County Court, New York, to which he pleaded not guilty and, as such, is still presumed innocent until proven guilty beyond a reasonable doubt in a court of law. The disposition of the matter is cited in the online records as "pending."
Another online FINRA records asserts that on April 9, 2013, Cetera Financial Specialists LLC received a customer complaint involving Podosek and that the customer:
ALLEGES THE REPRESENTATIVE CREATED FINANCIAL STATEMENTS MISREPRESENTING TO THE CLIENTS THAT MONEY HAD BEEN INVESTED AND WAS STILL AVAILABLE IN VARIOUS FUNDS AND INVESTMENTS MADE ON BEHALF OF THE CLIENTS.
The damages sought are $512,138.14. The online record asserts that:
THESE PARTIES WERE NOT, ACCORDING TO OUR RECORDS, CUSTOMERS OF THE FIRM.
The matter is indicated as pending since May 7, 2013.
FINRA Steps In
FINRA deemed the above acts of conversion to constitute violations of FINRA Rule 2010 and in accordance with the terms of the AWC, imposed upon Podosek a Bar with any FINRA member in any capacity.
Bill Singer's Comment
It often comes as a surprise to see that FINRA goes after industry participants for alleged misconduct that does not involve customers of a member firm and/or securities products. To the extent that there is still any debate about that practice, this case should further serve to dispel that misunderstanding. Take a cheap shot off the court and you could still get hit with a technical foul and tossed from the game.