Senior Resources Of Hawaii, Inc. and Mark K. Teruya: Securities Fraud
Here is a tough and prevalent problem with securities fraud. The SEC charged
Senior Resources Of Hawaii, Inc. and Mark K. Teruya with securities fraud.
"The Securities and Exchange Commission and announced the filing of a securities fraud action against a Honolulu-based investment adviser representative who targeted and defrauded members of the senior and retirement communities in Hawaii.The SEC's emergency action in federal district court in Honolulu against Mark K. Teruya ("Teruya") , age 35, and his company, Senior Resources of Hawaii, Inc. ("Senior Resources") seeks to halt the defendants' fraudulent activities and deprive them of their ill-gotten gains. Teruya is a representative of an SEC-registered investment adviser, which was not named in either of today's action.
According to the SEC's complaint, since at least 2004 and continuing as recently as August 2007, Teruya, through Senior Resources, has on multiple occasions fraudulently induced clients to sign a series of pre-printed, fill-in-the-blank forms by misrepresenting the purpose of the forms, the reasons that they needed prospective clients' signatures on the forms, and the way in which they would use the forms. The complaint alleges that Teruya used the signed forms to sell the seniors' existing securities holdings without their knowledge or authorization. The complaint also alleges that Teruya, who is also a licensed insurance agent, then used the proceeds of the unauthorized sales to purchase equity-indexed annuities for which he received substantial, undisclosed commissions totaling about $2 million.
The complaint alleges that each month the defendants lured about 75 senior citizens, mostly retirees in their 60s, 70s, and 80s, to free breakfast and dinner seminars focusing on retirement financial planning. The complaint alleges that the defendants targeted seniors through advertisements in local newspapers, such as The Honolulu Advertiser and Honolulu Star-Bulletin, and direct mail invitations. The advertisements featured eye-catching headlines, such as "7 Seldom Heard, Significant Financial Opportunities [That] May Be Available to Many Retirees," and "10 Common Costly Financial Mistakes Hawaii Retirees May Make and Ways to Avoid Them."
As alleged in the complaint, defendants then offered seminar attendees free one-on-one consultations with Teruya, a self-proclaimed "certified retirement financial adviser." The complaint further alleges that, during these individual meetings, defendants fraudulently induced the seniors to sign the blank forms."
The reason why this is a hard fraud problem to solve is several fold:
1. The post of ads in a local papers confers some authority from the newspaper onto the fraudster.
2. The use of "certified retirement financial adviser" connotes a certain authority, which in truth is absent.
3. The pitch of "free" consultations and free breakfast and dinner seminars to individuals who are likely to be lonely and willing to attend is hard to ban effectively.
4. Undoubtedly the pitch which secured the signing of blank forms misrepresented the authority given away.
Really, the only way to effectively prevent this type of fraud is with a specialized power of attorney which only kicks in to negate any financial decisions that were made pursuant to attending a free seminar.
Bind yourself like Ulysses to the mast when sailing by the sirens of financial planning.
