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Stoltmann Law Offices is investigating allegations that Linan Abrego (aka Ma Rosa Linan Abrego) misappropriated client funds at Merrill Lynch. According to published reports,  Abrego was barred by FINRA for failing to appear or respond to an inquiry in connection with her termination from Merrill Lynch on June 10, 2019 for misappropriating client funds. The misconduct reported by FINRA alleges that Linan Abrego of McAllen, Texas, failed to appear as required by FINRA Rule 8210 and accepted a lifetime ban from the securities industry, instead of answering FINRA or providing information in furtherance of FINRA’s investigation. According to her publicly available FINRA BrokerCheck Report, Ms. Linan Abrego was registered with Merrill Lynch as a broker and financial advisor from December 6, 2016 to June 10, 2019 when she was terminated for cause by Merrill Lynch for “misappropriating client funds.” Pursuant to FINRA Rule 8210, if FINRA requests a broker sit for on the record testimony (called an OTR) and the broker either refuses or simply does not show up or refuses to provide answers to written questions, or refuses to produce documents requested by FINRA in the course of their investigation, this can be grounds for being permanently barred from the securities industry. It is the equivalent of a career death sentence. Once a broker is barred for life by FINRA, absent extraordinary circumstances, that person will need to seek a career change.

Typically, brokers who refuse to show up for a Rule 8210 request do so knowing they are sacrificing their securities licenses. Some brokers may be near retirement or are not interested in maintaining their licenses, so they rather not submit themselves to an OTR, which can be stressful and require retaining legal counsel. Other brokers fail to show up for an OTR because they fear the testimony they will give may be incriminating if they are truthful. The FINRA AWC agreed to and signed by Ms. Linan Abrego only states he failed to show up for the OTR and provides no further explanation for barring her from the securities industry. Linan Abrego did this willingly, and instead of providing testimony from FINRA about why she was fired by Merrill Lynch, she chose to accept a lifetime ban from the securities industry.

Routinely, financial advisors who steal money from their clients do it in such a manner which should have alerted the firm’s compliance or supervision departments. Many times this sort of theft is facilitated by the broker simply forging withdrawal forms or requests. Another common way brokers steal money is to set up a third party LLC or other entity to which the broker directs client money directly from their accounts through wire transfers.  Sometimes the clients allow these transfers because the broker tells them these transfers are an investment in a company, or it’s where her commissions are paid to. No matter the ruse, sophisticated brokerage firms like Merrill Lynch are required to have procedures in place to catch their brokers if they attempt to steal client money. Whether there were unauthorized withdrawals or transfers from your accounts, every FINRA brokerage firm, like Merrill Lynch must have robust Anti-Money Laundering rules and regulations in order to ensure a level of alertness in these circumstances. Failing to properly execute these procedures which results in a broker stealing client money results in liability for the firm for negligent supervision, putting Merrill Lynch on the hook for the losses.

Financial Services firms sometimes breed their own cyber crooks and for reasons you might not suspect.  And while it is overseas based hackers that get the lion’s share of the publicity, it is internal company crooks who are responsible for much of the thievery.

Scott Capps is an interesting example as he allegedly stole $2.1 million. Recently, Capps told his tale to Philadelphia Inquirer reporter Joseph DiStefano before a month before the 48-year-old husband and father of one was scheduled to start a four-year federal prison sentence.  In the article, Capps said his path to the crime started out of a series of frustrations—that the source of the money he took was from dormant funds of various Vanguard clients.   After a period of time, those funds must be handed over to state governments as unclaimed property.

Capps acknowledged “”I stole $2.1 million, because I was [upset], because of what happened to my career.” As he explained: “Vanguard, as well as its many competitors, was not finding all the dormant accounts in its systems and didn’t seem to be trying really hard to improve. Checking the laws and questioning company lawyers, Capps became convinced that “we are all doing this wrong.”  The article went on to say he wanted to do it right by sending out a mass mailing or making mass calls to the account holders to tell them to respond and then their accounts wouldn’t be inactive, but Vanguard told him they didn’t want to do it.

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