While many victims of investment fraud are ordinary “mom and pop” investors, anyone who invests through a brokerage firm or advisor faces the risk of suffering fraudulent losses. This is true not only for those who invest with small firms operated by scam artists, but for those who invest with major financial institutions as well.
Dallas Cowboys running back Darren McFadden’s lawsuit against Ameriprise Financial is just one of the most recent examples. According to news reports, McFadden is suing the advisory firm in an attempt to recover $15 million in fraudulent investment losses. As summarized by the Star Tribune, McFadden’s lawsuit alleges that:
“Ameriprise launched an internal investigation of the broker’s handling of his account in January 2010 but failed to notify him of its concerns. . . . [T]he company also failed to alert him when it suspended the broker 10 months later. As a result, McFadden . . . maintained his relationship with the broker until 2015, when he began trying to sell his home in Oakland for a move to Dallas after signing with the Cowboys. At that point, according to McFadden, the broker disclosed that there was not enough money in his account to purchase his new home in Dallas for cash.”
Ameriprise has faced several similar allegations of inadequate supervision in the past. As recently as a year ago, the Financial Industry Regulatory Authority (FINRA) fined Ameriprise $850,000 for failing to supervise an employee who stole more than $370,000 from five of the firm’s customers. As reported by the Star Tribune, over the past several years Ameriprise has been, “repeatedly fined . . . for failing to adequately supervise its brokers and allowing those employees to steal from the company’s clients.”
Advisor Accused of Fraud was a Childhood Friend
According to McFadden’s lawsuit, he chose Ameriprise because it employed one of his childhood friends, Michael Eugene Vick, Jr., as an investment advisor. McFadden gave Vick power of attorney after signing a $60 million contract in 2008, after Vick allegedly told McFadden that he needed control over McFadden’s accounts in order to, “avoid the ‘financial disasters’ that tend to flow from unsound spending habits, poor management or speculative financial advice.” Over the next several years, McFadden alleges that Vick withdrew more than $8 million in cash from his accounts.
Sadly, this type of scenario is far too common. Many brokers and investment advisors choose to take advantage of investors’ misplaced trust, not only depriving them of investment potential, but in many cases also squandering their life savings. While there are steps investors can take to mitigate their risk of suffering fraudulent losses, as this case shows, investment firms and advisors can also go to great lengths to conceal their misdeeds.
Speak with a Stock Fraud Lawyer at Zamansky LLC
If you believe that you may have suffered fraudulent investment losses, you can contact Zamansky LLC for a free, no-obligation consultation. With offices in the heart of Wall Street, we represent investors nationwide. To speak with an experienced investment fraud attorney in confidence, please call (212) 742-1414 or send us a message online today.