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The recent arrest of former broker Gary Basralian (CRD #14385) for defrauding two clients of $2.1 million also raises allegations of failure to supervise about his brokerage firm, Royal Alliance Associates (CRD #23131.) According to news reports, Basralian embezzled money from two elderly women and used the funds for his own expenses. When the discrepancies were discovered, the elderly victims’ attorney notified both the FBI and DOJ. Both agencies took immediate action, and Basralian was arrested May 23, 2018 on charges of wire and investment adviser fraud. He could face as much as 25 years in prison.
The stockbroker in question allegedly deliberately sought out vulnerable victims who might not notice that he was stealing funds directly from their accounts. Basralian is, himself, 70 years of age—so he likely embezzled from his contemporaries. When the law firm representing the two victims contacted Royal Alliance, Basralian was not immediately terminated, but allowed to resign. He signed a FINRA agreement and was barred from being a broker or affiliated with any broker firms.
But what about the brokerage firm, Royal Alliance, that failed to stop him? And why didn’t Royal Alliance notice or stop Basralian’s unethical activities over a ten-year period? Allegations against Royal Alliance in this case include inadequate supervision of brokers and lax anti-money laundering compliance that allowed this to not only happen, but continue. But this is not the first time Royal Alliance has been host to broker misbehavior, with several instances of “failure to supervise” kinds of sanctions.
In one case, another broker named Kevin O. Kelley (CRD #1183995) was sentenced to 170 months in prison by a Manhattan federal court for defrauding senior citizens out of $4.2 million in late 2006. Kelley was permanently barred by FINRA in 2005 in the state of Connecticut. Royal Alliance was fined $750,000, and required to give restitution to the victims, an amount exceeding $9.2 million, including interest. Additionally, Royal Alliance was required to earmark money to hire additional personnel to “improve its supervisory and compliance systems.”
Elder financial fraud is a growing problem in the financial services industry. “Victim 1” and “Victim 2” may not be the only victims Basralian defrauded. The firm has not accepted responsibility to the two elderly women. The firm has made no effort to compensate the victims, and is, instead, fighting the allegations. Letters have been sent to Basralian’s remaining clients, informing them that their accounts now have a different broker. But Royal Alliance does not mention the allegations or his arrest.
Royal Alliance stockbrokers have been the subject of multiple claims of stockbroker theft, elder financial abuse and other misconduct, and paying considerable sums for fines and restitution. Royal Alliance’s FINRA license reflects 74 disclosures to date. Of that number, 36 are regulatory sanctions dating back to 1990, all involving fines, censures and “disgorgement/restitution.” The company has a history of paying fines and restitutions “without admitting or denying” charges or allegations. Many involve a failure to supervise brokers, allowing “brokers without the benefit of registration” or un-registered branch offices to conduct transactions. Royal Alliance Associates has paid out approximately $5,509,620 in fines, fees and client reimbursement related to broker misconduct. There are also 31 documented instances of arbitration, including various amounts of awarded damages. But Royal Alliance is still in business, and still a FINRA-affiliated broker firm and is subject to FINRA rules including new FINRA rules to protect the elderly including FINRA Rule 4512 and FINRA Rule 2165.
MarketWatch reports that about 17% of elderly people in the US have reported being scammed, and the average victim of elder abuse loses about $120,000. Banks and other financial institutions are increasingly using high-tech methodology to halt the financial abuse of seniors, but it still happens. Unfortunately, when the abuse is by a trusted advisor, many of these rules are ineffective.
Elder financial abuse is frequently under-reported, and elders are frequently an easy target. A victim may fear retribution (particularly in a nursing home or home care circumstances) may be overly trusting of someone, or be unable to remember details due to a neurological condition, such as Alzheimer’s. Some elders don’t realize they’ve been the victim of a crime, or can’t remember every detail. This leaves the broker in the clear until an audit by a friend, relative or legal counsel who discovers the activity. (Federal statutes covering elder abuse can be found at the Justice Department’s website.)
Contact Our Firm if You’ve Invested with Royal Alliance
Have you invested with Royal Alliance, or know someone who has? If you believe your loved one is a victim of elder financial abuse, the Silver Law Group is ready to help. Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida. We represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.