It’s Like Giving Money to Madoff

Mar 2010 // Huffington Post

In the early 1950s, Dan Rogas played professional football, first for the Detroit Lions and then the Philadelphia Eagles. As an offensive lineman, needless to say, he took his fair share of knocks. Now, some 50 years later at age 84, he and his 79-year-old wife, Betty, who live in Beaumont, Tx., are experiencing even worse knocks.

In brief, the broker, Thurman Ray “Bo” Crawford, who plied his trade at Securities America, a subsidiary of investment giant Ameriprise Financial (formerly American Express Financial Advisor)–which manages about $372 billion of assets and boasts more than two million clients–convinced the Rogases in early 2007 to dramatically alter their portfolio. His recommendation: to sell the conservative stocks and bonds they held in a UBS account and invest the money instead in a private placement, essentially notes issued by a medical receivables company, Medical Capital, that Securities America was promoting.

Unfortunately, the Rogases heeded his advice. As they later discovered, friends like Crawford are as desirable as cancer. Medical capital is now in receivership. It turned out to be a massive fraud, ripping off investors nationally for about $1 billion. In July of 2009, the Securities and Exchange Commission stepped in, filing a complaint in which it alleged fraud by Medical Capital.

“It’s disgraceful,” says the attorney for the Rogases, Thomas Ajamie, the managing partner of Houston-based AJAMIE LLP, which filed a lawsuit on December 23 against Ameriprise, Securities America and others, alleging negligence in recommending such a risky and illiquid investment to an elderly couple. Ajamie contends the defendants failed to do proper due diligence and put the Rogases into such a product because it generates higher commissions.