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Indiana Pennsylvania based stockbroker Bernard M. Parker has plenty of tax liens.  Since 2006, according to public disclosure records, he appears to have had at least six liens against him for failure to pay his taxes.  In fact, Bernard Parker had so many tax liens against him, he began selling tax liens to his customers.

According to an action filed by the United States Securities & Exchange Commission in the United States District Court for the Western District of Pennsylvania, Parker is alleged to have misappropriated or stolen investor funds and otherwise conducted a Ponzi Scheme.

According to the SEC action, Parker was a stockbroker with Edward D. Jones & Co. was operating from his home in Indiana, Pennsylvania, under the name “Parker Financial Services”  Parker also understandably was also the founder, principal and sole employee of Parker Financial Services.

According to the SEC, beginning in 2008 to at least December 2014, Parker and Parker Financial Services decided to manufacture, offer and illegally sell unregistered securities, in the form of purported “tax liens” to his Edward Jones customers.

Property owners who fail to pay their property taxes are subject to tax liens. These liens generally accrue high rates of interest and other penalties, and generally are sold to private investors at municipal auctions. The municipality gets some portion of their money, and the auction winner gets to wait until the property is sold or foreclosed upon to collect the lien together with interest.

Here, Parker is alleged to have solicited his customers many of whom lived in Pennsylvania and Virginia to purchase tax lien certificates.

Parker is alleged to have shown investors computer printouts of vacant lots or homes, and falsely told them that Parker Financial held liens on those properties. Parker would then provide his investors a simple one page contract on “Parker Financial Services” letterhead, titled “Investors Contract,” and which stated the investor’s name, amount invested, and the date of the investment.

The contracts provided that Parker would pay the specified investor an annual interest rate, make quarterly, semi-annual or annual payments, and upon maturity, two or three years from the date of the investment, Parker Financial would repay the principal and interest in full.

 

According to the SEC, after receiving checks from investors, Parker deposited only a portion of the funds into a bank account and took the remainder in cash.  During the period from 2008 to 2014, Parker withdrew over $650,000 in investor funds in cash from teller transactions, ATM withdrawals, and checks cashed at local supermarkets.

Of the remaining investor funds, Parker used approximately $197 ,000 on point of sale transactions, $150,000 on personal checks, and $169,000 on online bill payments. Among other things, he used investor funds to pay for his father-in-law’s health expenses, renovations on his house, car payments, insurance payments, and other day-to-day expenses.

In classic Ponzi scheme style, Parker also paid approximately $188,000 in purported interest payments to investors who did not “roll over” their interest into new investments.

Parker is no stranger to tax liens. During his association with Edward Jones, Parker appears to have been  subject to at least six tax liens, for the failure to pay his own taxes.  It also appears that Parker is no stranger to selling away or the sale of unregistered securities.  Parker was fired by a prior firm for allegedly selling unregistered securities.

It appears that Parker’s scheme became unraveled sometime in December 2014, as the result of a customer complaint, resulting in his termination from Edward Jones. Oddly enough, it appears, at least according to FINRA Public Disclosure Records, that Parker disclosed his outside business activities, and specifically that he was selling tax liens, to Edward D. Jones prior to his termination.

Edward Jones probably contends that it is not responsible for Parker’s conduct because they did not authorize him to steal from his customers. Courts and securities arbitration panels, in identical circumstances, have long held brokerage firms responsible for the conduct of their registered representatives in “selling away” cases based upon the broker-dealer’s failure to supervise.

Notwithstanding that Parker operated from his home under the name Parker Financial Services, FINRA has repeatedly reminded its members that “Irrespective of an individual’s location or compensation arrangements, all associated persons are considered to be employees of the firm with which they are registered for purposes of compliance with [FINRA]rules governing the conduct of registered persons and the supervisory responsibilities of the member. The fact that an associated person conducts business at a separate location or is compensated as an independent contractor does not alter the obligations of the individual and the firm to comply fully with all applicable regulatory requirements.” Notice to Members 86-65 (September 12, 1986).

Parker’s customers are urged to consult with an attorney or take legal action to preserve their rights.

The Guiliano Law Group

Our practice is limited to the representation of investors in claims, for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost to unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.

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