Elderly Brokerage Clients Victimized In Changed Address Scam

September 23, 2013

Four elderly clients victimized in a brokerage firm/bank affiliate address-of-record check scam involving an international fugitive tricked into returning to the USA for arrest. C'mon now -- how ya gonna not read something with that lead-in?

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, PNC Investments LLC submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of: PNC Investments LLC, Respondent (AWC 036648701, September 18, 2013).

PNC Investments ("PNCI"), a Pittsburgh, PA, based full-service broker-dealer employing about 2,200 registered sales persons, has been a FINRA member firm since 2003. 

SIDE BAR: The AWC asserts that PNCI had a prior regulatory history consisting of a July 23, 2009, Censure and $250,000 fine arising from its alleged failure to establish and implement supervisory procedures reasonably designed to achieve compliance with its suitability obligations relating to the sale of variable annuities.

Branching Out

During the relevant time from October 2011 through January 2013,  PNCI's written supervisory procedures ("WSPs") prohibited the use of a branch address as a customer's mailing or residential address. Notwithstanding such WSPs, during the relevant time, PNCI registered representative Burim Turkaj opened two customer accounts using his branch's address (which was also a shared location with PNCI's bank affiliate) for each customer's mailing address. Additionally, during the same period, a third customer of Turkaj's changed his account's mailing addresses to that of Turkaj's branch, and a fourth customer used the branch address on a variable annuity application.  The AWC asserts that PNCI failed to detect these four customer designations of Turkaj's branch address.

Checking Out

Allegedly, Turkaj initiated unauthorized transactions in a customer's accounts and, thereafter, caused $128,000 in checks to be generated and delivered to his branch. The PNCI bank-affiliate's staff provided Turkaj with mail addressed to this customer, which essentially facilitated Turkaj's misappropriation of the checks.  Thereafter, Turkaj appears to have removed the checks from the envelopes sent to the branch and subsequently deposited the checks into outside joint bank accounts, which he had fraudulently opened in his name and that of the victimized customer. The AWC asserts that PNCI reimbursed this customer for the losses.

Coming Up Short

The AWC asserts that PNCI's supervisory control system failed to 
  • specify a procedure to detect or prevent the establishment of a customer account using a branch office as the mailing address or the change of an existing account to use a branch office as the mailing address; and
  • include exception reports that would have identified if a customer's mailing address was the same as a branch office address. 
As a consequence of the alleged supervisory shortcomings, PNCI failed to detect that Turkaj had initiated transactions to generate checks to a customer, which were sent to the branch where Turkaj worked, which he thereafter intercepted and converted the funds. 

Paying The Price

As a result of the cited misconduct, FINRA asserted that PNCI violated NASD Conduct Rules 3010; Supervision, 3012: Supervisory Control System (a)(2)(B)(i) and (ii) and FINRA Rule 2010. In accordance with the terms of the AWC, FINRA imposed upon PNCI a Censure and $100,000 fine

Bill Singer's Comments

Compliments to FINRA on setting forth the failures with PNCI's supervision and for offering useful address-change guidelines.  Member firms would be well advised to implement tighter controls on the utilization of branch addresses as the address of record for any customer account -- and it would be equally advisable to require an immediate compliance inquiry as to the reasons for such changes, replete with requirements to promptly and directly contact the subject customers for confirmation.

If I have one quibble with this AWC, it is that it could have been written a bit more precisely because is is a tad difficult to figure out what exactly occurred with each of the four cited customers.  Similarly, there were some aspects of this case that were not presented in the AWC but offer meaningful context as to the respondent and the extent of his misconduct.


According to online FINRA documents as of September 23, 2013, on February 1, 2013, PNCI reported the following:


Customer Complaint

Additional online FINRA documents disclose that on March 13, 2013, PNCI received a customer complaint seeking $12,884 in damages and alleging:


PNCI settled the customer complaint with a $10,994.41 payment on June 3, 2013.

FINRA Suspension And Bar

According to other online FINRA documents, on April 17, 2013, the self-regulatory organization suspended Turkaj for filing to respond to its requests for information.  On July 22, 2013, the suspension was extended to a Bar.

Felony Charges

Another interesting aspect of this matter is that following the initiation of investigations into his conduct, Turkaj had apparently fled the United States for his homeland of Kosovo, which does not have an extradition treaty with the U.S.  Apparently, Turkaj was tricked into returning to the U.S. when local authorities here purposely misled him into believing that PNC was embarrassed by the whole matter and that the firm had agreed to somewhat quickly and quietly allow him plead to a minor theft of an office computer charge (on top of everything else, it appears that Turkaj allegedly stole an office computer). 

Turkaj was arrested on May 22, 2013, on four counts of Felony Theft From Person Over 65 $300 Value Or Greater and five counts of Felony Criminal Use of Personal ID Information. See, Indian River County Sheriff's Office Inmates Records. Note: The charges against Turkaj are merely allegations and he is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.  According to online disclosures, Turkaj's victims included: 
  • Barbara Jones, an 85-year-old widow 
  • Carl Bartuccio, 86, 
  • Harvey Woofter, 90; and 
  • Howard Gordon, 85
I think it would have been appropriate for the FINRA AWC to specify that the four customers involved were from 85 to 90 years of age. 

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