April 1, 2019
In today's featured FINRA public-customer arbitration, we got allegations by a husband against an ex-wife, which, you know, sort of means that he's an ex-husband, but, for reasons that I don't quite understand, only the wife is referenced in the FINRA Arbitration Decision as an "ex." Be that as it may, the Claimant husband -- ex-husband -- sued his brokerage firm and stockbroker alleging that they were somehow involved with the alleged looting of the couple's joint accounts. Ah yes, the old he-said-she-said-she-looted.
Case In Point
In a FINRA Arbitration Statement of Claim filed in May 2014 and as amended, public customer Claimant Foster representing himself pro se asserted fraud and/or aiding and abetting fraud; breach of fiduciary duties; respondeat
superior; and failure to supervise. The FINRA Arbitration Decision characterizes the causes of action as arising from:
(1) the alleged forgery
of Claimant's initials and signature on the Policy Owner Surrender Request form relating
to the surrender of Claimant's variable universal life insurance policy with Nationwide Life Insurance Company (the "Policy"); and (2) the alleged looting by Respondent
Gelmisi and Claimant's ex-wife of Claimant's joint accounts, and transferring of the
money to accounts held for the benefit of Claimant's ex-wife and third parties, putting
them beyond Claimant's reach.
Ultimately, in addition to costs and fees, Claimant Foster sought:
- $33,847.73, representing the surrender amount of the Policy;
- $16,000.00, representing the estimated lost increase in value since 2008 of the Policy;
- $907,000.00, representing the amounts transferred from Claimant's joint accounts to Claimant's ex-wife or third parties;
- $1,245,000.00, representing losses suffered by Claimant as a consequence of Respondents' actions;
- $1,200,000.00, representing the loss of Claimant's home;
- $70,000.00, representing losses suffered by Claimant for liquidation of his personal IRA;
In the Matter of the Arbitration Between Scott Foster, Claimant, v. Hantz Financial Services, Inc. and Tina Gelmisi, Respondents (FINRA Arbitration Decision 14-01700)
Respondents generally denied the
allegations; asserted various affirmative
defenses; and filed a Counterclaim, asserting abuse of process and
defamation, which allegedly arose from statements and written
complaints/claims made by Claimant to the Michigan Department of Insurance and
Financial Services, the Department of Licensing and Regulatory Affairs, FINRA and the
public in general. Counterclaimants sought an Order from the FINRA Arbitration Panel directing the Claimant to publish
retraction to the same persons and in the same manner as the defamatory statements
were published; compensatory, punitive, and exemplayr damages; costs; and fees.
As is often the case with arbitrations involving underlying marital disputes, this one seemed replete with all sorts of motion practice. Among the motions made during the FINRA Arbitration proceedings were Motions to amend the statement of claim; to dismiss for lack of eligibility; to preclude an expert's report for contempt and issuance of sanctions; and to compel document production. The Panel responded to said motions by either deeming them moot or denying them.
The FINRA Arbitration Panel denied Claimant Foster's claims and the the Counterclaim.
FINRA and/or the Panel assessed the following:
Claimant Foster: $1,800 Initial Filing Fee; $600 Postponement Fee; $200 Discovery-Related Motion Fee; $66.66 Contested Motion for Issuance of Subpoena Fee: and $5,550 Hearing Session Fees
Respondents Hantz Financial Services, Inc.: $2,800 Member Surcharge; $750 Pre-Hearing Processing Fee; $5,000 Hearing Processing Fee;
Respondents Hantz Financial Services, Inc. and Gelmisi: $1,500 Counterclaim Filing Fee;; $400 Discovery-Related Motion Fee; $133.34 Contested Motion for Issuance of Subpoena Fee: and $12,566.66 Hearing Session Fees.
Bill Singer's Comment
It would seem to me that such a threshold question as to whether the insurance policy was a marital asset, whether the surrender was legally undertaken, and whether the wife had the right to the proceeds should have been presented in a state court pursuant to the divorce proceedings rather than before a FINRA Arbitration Panel. It may well have been that such threshold issues were adjudicated during any divorce proceedings but, unfortunately, the FINRA Arbitration Decision discloses nothing about that.
Claimant Foster first filed his FINRA Arbitration Statement of Claim in 2014, which means it took some five years to adjudicate the dispute. Perhaps the delay was attributable to Claimant's pro se handling of his case? On the other hand, given the underlying spousal dispute and the protracted motion practice, it may simply have been that this arbitration was never going to set a world record for completion.
Online FINRA BrokerCheck records as of April 1, 2019, disclose that Respondent Gelmisi was first registered in 1992, and she was registered with Hantz Financial Services from August 1999 to September 2017. As set forth under the BrokerCheck heading "Customer Dispute -- Pending," Respondent Hartz Financial posted the following "Allegations":
In addition to her firm's statements, Respondent Gelmisi purportedly noted the following under the BrokerCheck heading "Broker Statement":
Claimant, a former client, alleges rep assisted claimant's ex-wife in surrendering his individual life insurance policy without claimant's knowledge, the proceeds from which the claimant's ex-wife then invested in an individual policy. Claimant alleges by assisting client's ex-wife with surrender of contract she assisted in fraud and breached duties to claimant.
The firm has conducted a thorough investigation on this matter and has found no evidence to substantiate the client's allegations. A counterclaim has been filed for defamation and abuse of process.
FinTech Global Markets Acquires Sutter Securities to Form a Modern Investment Banking Enterprise / The merger creates a powerful combination of financial business lines to serve issuers and investors (Press Release)
Brothers Who Allegedly Ran Unlicensed Financial Advisory Business Out of Their Parents' Encino Home Face Wire Fraud Charges (DOJ Release)
Ex-Husband Says Ex-Wife and Stockbroker Looted Insurance Proceeds From Joint Account (BrokeAndBroker.com Blog)
Ukrainian Man Extradited to the United States to Face Charges in International Money Laundering and Fraud Scheme / Money Mule Operation Allegedly Effectuated the Theft and Laundering of at Least $2.8 Million (DOJ Release)
SEC Charges Medical Device Company With FCPA Violations (SEC Release)
Manhattan Jeweler Pleads Guilty To Insider Trading (DOJ Release)
Pro Se Associated Person Wins Damages and Expungement in FINRA Arbitration In the Matter of the Arbitration Between Todd Gary Schwendiman, Claimant, v. Alternative Asset Investment Management Securities, LLC, Respondent (FINRA Arbitration Decision)