Stockbroker Defrauds Cerebral Palsy Victim and Elderly

January 24, 2012

About all that's left to do after reading this story is to take a shower -- it's that dirty and disgusting a crime

According to a federal Indictment filed in federal court in Baltimore on August 16, 2011, from August 2000 through February 2004, Ralph Edward Thomas, Jr., 52, Baltimore, MD, was Vice President of Harbor Financial, a subsidiary of Harbor Bank which offered brokerage, insurance products and financial planning.  Thereafter, from February 2004 through July 2010, Thomas was employed as a Wells Fargo Advisors, LLC. financial advisor.

KL Account

In December 2001, Thomas allegedly met KL, who served as the trustee of a $3 million settlement received on behalf of her daughter.  The daughter suffered birth injuries.  Thomas allegedly persuaded KL to move the trust account to Harbor Bank.

Following the opening of the trust account at his employer's, Thomas allegedly stole some $756,963.98 from the trust account through unauthorized withdrawals and cashier's checks.  The stolen funds were allegedly used by Thomas to pay his personal credit card accounts and other personal expenses.

Between June 2006 and May 2009, without permission, and through forgery, Thomas initiated three mortgages in the name of KL on her personal residence.  The mortgages' proceeds were deposited into the client's Harbor Bank account and then allegedly withdrawn by Thomas, who diverted the funds to his personal use. KL incurred $26,886.36 in losses and expenses as a result of these three mortgages.  On July 29, 2009, Thomas stole $100,000 from the trust in order to purchase a home.

LM Account

In January 2006, Thomas became the financial advisor for retiree LM, who oversaw the disbursements from an annuity that she shared with her 85-year-old sister, who suffered from dementia. Thomas allegedly withdrew $75,000 from LM's account and used $42,000 of those funds for his personal benefit, including purchasing cashier's checks made payable to credit card companies where Thomas held accounts.

Guilty Plea

If convicted, Thomas faced a maximum sentence of 20 years in prison and a $250,000 fine for mail fraud. The Indictment sought the forfeiture of $838,350.00 (the proceeds of Thomas' scheme), including investment accounts owned by Thomas, the home he bought with KL's stolen funds, and luxury automobiles.   On September 7, 2011, Thomas pleaded guilty to mail fraud.

In entering his plea, more details of Thomas' fraud emerged.  For example, KL's daughter suffered from cerebral palsy. Further, the trust account was established in 1994 and funded by the proceeds of a $3 million medical malpractice settlement, which were used to buy an annuity, which was supposed to pay the child at least $3,990 a month but apparently averaged closer to $6,287.53.

Notwithstanding that apparent bit of good news in the form of a larger than originally anticipated monthly payment, Thomas disbursed only $1,000 to $1,500 a month from the trust account to the mother for the care of the child.  As to the balance of the annuity payments, Thomas stole about $756,963.98.  As to the three mortgages referenced in the Indictment, Thomas obtained $205,000. Additionally, Thomas stole $12,500 from the mother's personal account held at Harbor Bank.

From a victim of medical malpractice. A child. Suffering from cerebral palsy.

As part of his plea agreement, Thomas will pay $838,350.34 in restitution and forfeit property, including funds held in investment accounts owned by Thomas, his home in Reisterstown and luxury automobiles. His sentencing is scheduled for February 2012.


Without admitting or denying the findings, prior to a regulatory hearing, and without any adjudication, Thomas submitted a Letter of Acceptance, Waiver and Consent ("AWC") to the Financial Industry Regulatory Authority ("FINRA") for the purpose of settling alleged violations.  FINRA accepted the settlement offer. In the Matter of Ralph Edward Thomas, Jr., Respondent (AWC 2010022861802, January 19, 2012).

FINRA found that Thomas converted customer funds in violation of FINRA Rules 2150 and 2010 and NASD Rules 2330 and 2110.5  In accordance with the AWC, FINRA permanently barred Thomas from associating with any FINRA member firm.  Although there was no fine imposed, the AWC notes the obligation of restitution in the criminal matter.

Bill Singer's Comment

Initially, I stumbled upon FINRA's AWC and thought the case was shocking enough.  Then I looked into the underlying criminal case and was outraged. Armed with a fuller understanding of Thomas' crimes, I re-read FINRA's self-regulatory case and realized how pathetic Wall Street regulation truly is.

Notwithstanding the epic nature of Thomas' atrocities, FINRA still felt it okay to accept a settlement that did not require him to admit its charges.  Seriously? As if this low life was going to show up and contest a lousy self-regulatory proceeding while he's awaiting sentencing in federal court?  Why not demand he settle and admit his FINRA violations - after all, FINRA didn't demand one cent in sanctions from this broker.