The Financial Industry Regulatory Authority (FINRA) announced Tuesday that it has barred two brokers for wrongfully converting $300,000 from an elderly widow with diminished mental capacity and then failing to cooperate with FINRA’s investigation.
In barring Fernando L. Arevalo and Jimmy E. Caballero from the securities industry, FINRA found that between April and July, the elderly widow deposited approximately $300,000 in proceeds from the sale of two annuities into a bank account Arevalo had opened for her.
The funds were then withdrawn from the account via two cashier’s checks, and on the same day, Caballero deposited the money into a joint account he opened in his name and the widow’s name at a different bank, FINRA says.
When the bank questioned the deposits and required further confirmation before clearing them, Arevalo drove the widow to the bank to confirm the source of the funds. “Funds from the account were then depleted through numerous checks payable to Arevalo and Caballero,” FINRA says, with Arevalo using the account’s debit card for personal expenses including payments on a real estate loan, car loan and various retail purchases.
The widow was unaware of any withdrawals or purchases against the joint account by Arevalo or Caballero, and did not authorize the transactions, FINRA says.
Arevalo failed to provide testimony to FINRA. Although Caballero initially provided testimony, he subsequently refused to provide additional information that was relevant to the investigation.
Caballero and Arevalo neither admitted nor denied the charges, but consented to the entry of FINRA’s findings by its Office of Fraud Detection and Market Intelligence and the Department of Enforcement.
Check out SEC Enforcement: ‘Trader’ Bilks Elderly Investors to Pay Mortgage on ThinkAdvisor.