There are good and bad workers in all industries. Some industries' bad workers stand out more than others. In the coffee service industry, a bad barista can mess up your latte and ruin your morning. In the financial services industry, a bad financial advisor can steal your life savings and ruin your life.
So AdvisorOne found BrokerCop.com, a website for "investors only," it said, which recently released its 2012 List of "Worst Financial Advisors in America." A law firm based in Georgia, James A. Dunlap Jr. & Associates, which focuses on investor and consumer fraud cases, created BrokerCop.com.
BrokerCop's website says it "provides critical consumer ratings, reviews, and information on stockbrokers, brokerage firms and investments. BrokerCop.com accepts no advertising or compensation from the brokerage or financial industry." The site, apparently to assert a claim of independent advice, also warns that it is "not for use by stockbrokers or anyone affiliated with the brokerage or financial industry."
Fortunately BrokerCop spared AdvisorOne from litigation and allowed us to use their "Dirty Dozen" list, which tallied the convictions of the worst advisors over the past year. So we took BrokerCop's list and ranked each "Advisor Horribilis" in reverse order of horribleness, balancing amount of money stolen with amount of "ick" factor involved. So theft of a mere $30 million from clients doesn't outweigh theft of a modest $838,000, if one of the clients happens to be a child with cerebral palsy—yes, that actually happened—or if one of the clients happens to get murdered—yes, that actually happened, too.
12. Michael Sydney Wooton (Metarie, La.)
$1 Million Fraud
Wooton pleaded guilty to defrauding 14 clients out of nearly $1 million. According to court documents, Wooten admitted that while he was employed as a stock broker for Western International Securities, he converted client funds for his personal benefit. In order to hide this fact, he created and mailed fraudulent statements to his clients.
11. Mark Madison (Little Rock, Ark.)
$1 Million Fraud
Madison, a licensed agent for a stockbroker, pleaded guilty to cheating clients out of more than $1 million. According to the indictment, Madison solicited funds from his clients for several different investments. However, instead of investing the funds as promised, Madison used the funds for his own personal benefit including payment of the mortgage on his personal residence, country club dues and expenses, personal tax obligations, credit card payments, and repayment of personal and business loans.
10. Molly Wilson (Seattle)
$400,000 Fraud, Including Client Suffering From Alzheimer's
Wilson, a former Merrill Lynch securities broker, was convicted of 14 counts of theft for bilking clients out of more than $400,000 to support her flashy lifestyle. Wilson was a first vice president and a top broker at the Seattle office of Merrill Lynch where she earned a six-figure income, drove a $200,000 Rolls Royce and lived in a $1.2 million home in Bellevue's Somerset Hill. She was fired in 1989 for what Merrill Lynch described as "a violation of company policy." She then formed her own firm, Wilson Securities. In 1992 she was sentenced to six years and three months in prison.
9. Richard A. Finger Jr. (Bellevue, Wash.)
$7 Million Fraud
Finger pleaded guilty in a Seattle federal court to perpetrating a $7 million fraud on his own clients and was sentenced in April to 54 months in prison and ordered to pay $7 million in restitution. Finger owned and operated Black Diamond Capital Management and Black Diamond Securities of Kirkland, Wash. Finger defrauded 10 clients of as much as $7 million. Some of the victims invested with Finger when he was working for a Seattle brokerage firm. While he was providing false statements to his clients, Finger spent his ill-gotten money on leasing a $71,000 Cadillac Escalade and a $13,000 Ducati motorcycle.
8. Gregg M.S. Berger (New York)
$30 Million Stock Scam
Berger, 48, pleaded guilty last year to participating in a wide-ranging international stock fraud scheme involving the illegal use of bulk commercial e-mails, or "spamming," to promote thinly traded Chinese penny stocks to generate more than $30 million in illegal proceeds for him and his co-conspirators.
7. Rebecca Engle (Nebraska City, Neb.)
$30 Million Stock Fraud
Former stockbroker Engle pleaded guilty for her involvement in what prosecutors called the biggest securities fraud case in state history. She was sentenceed last August to two consecutive 18- to 36-month prison terms.
Engle was accused of improperly selling risky and unsuitable investments in several interrelated Florida companies to hundreds of investors. Most of those defrauded were nearing retirement age or had already retired and were seeking conservative, stable investments with little risk. Instead, Engle invested their money in high-risk enterprises and never fully explained the risks, according to prosecutors. According to court documents, Engle characterized the Florida companies as "can't-miss deals" or "mini-Berkshire Hathaways," referring to the enterprise run by the billionaire Warren Buffett.
6. Richard Clark (Tulsa, Okla.)
$43 Million Stock Fraud
Former stockbroker Clark was convicted by an Oklahoma federal jury of fraud, among other charges. According to evidence presented at trial, he and other conspirators devised and engaged in a scheme to defraud investors known as a "pump-and-dump," in which they manipulated three publicly traded stocks. The evidence at trial established that the conspirators obtained approximately $43 million in proceeds from the stock manipulation.
5. Ross Mandell (New York)
2. Ralph Edward Thomas Jr. (Reisterstown, Md.)
1. Harvey Morrow (Long Beach, Calif.)
