I'm going off on a bit of a tangent on Financial Advisor scams versus poor Sales practice --- but Financial Advisory issues of all sorts happens with large firms and small firms too. Recent article in Chicago Tribune about a small independent financial advisor who scammed clients and even a client who was a very close family friend for many years.
http://articles.chicagotribune.com/2012-08-12/business/ct-biz-0812-bf-elder-abuse-20120812_1_financial-exploitation-financial-abuse-abuse-cases***************************************
Elder financial abuse in Illinois on rise
Retiring baby boomers, many with high equity and savings, becoming ripe target for financial predators, officials say
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Downers Grove retiree Robert Govenat was on the computer every day, watching prices of his stocks go down.
It was November 2007, and a bear market was threatening.
"He was about to have a nervous breakdown or a heart attack," recalls his wife, Jan, a retired third-grade schoolteacher.
Over lunch at a hot dog place in Darien, a longtime friend and financial planner Algird Norkus told Govenat that he had an alternative investment for select people: It would keep the couple's principal safe and pay 13.5 percent annual interest.
Norkus pleaded guilty to one count of mail fraud. In March, he began serving 63 months in prison. He also was ordered to pay $4.6 million in restitution to nearly 70 victims, many elderly, including Robert and Jan Govenat, and Robert's mother. His plea agreement said he commingled investors' moneys, in part to make payments to other investors and in part to benefit himself.
"Don't trust anyone," Jan Govenat, 71, said Tuesday when asked what she learned from the experience. "I can't tell you how many times I've said that to friends since this happened." She also regretted not sharing their change in investment strategy with their two adult children.
Robert Govenat, 72, gets choked up discussing what happened with the savings of his mother, now 99 and living in a
retirement community. "I'm not proud of what I've done to my mom," he said last week with a quivering voice.
"You were trying to help," his wife replied.
Govenat said he lets few people get close to him, but Norkus was one of them.
"I don't trust anyone now, except my wife," he said.
The couple's two children never bring up the ordeal.
"It's the silent death," Robert said.
The couple, who once felt secure about their
retirement years, now worry constantly about finances.
"We don't sleep well," Jan said.
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Robert said he had "blinders" on because Norkus was a friend; he and his wife dined with Norkus and his wife. They went to the wedding of Norkus' son. "He came to our daughter's wedding," Jan recalled. "He didn't go to our son's wedding but he sent a box of Cuban cigars."
Jan said she doesn't blame Robert for trusting Norkus. "Think of someone you've known a long time who you think is a nice person, who you'd trust with anything," Jan said. "That's how we viewed this man."
