Ernest J. Romer of Sterling Heights, Michigan, whom until very recently was associated with CoreCap Investments, located in South Field Michigan, was charged with embezzlement.
According to the Complaint, Michigan Investigators believe Romer’s transactions were part of a larger “pattern of felonious financial maneuvers involving a field of investors, with as many as 20 additional victims.”
The monies were allegedly to fund Romer’s personal expenses, including Kroger, Meijer, Walmart, Target, Costco, Red Box, gas stations and restaurants. He also allegedly made ATM cash withdrawals and transferred some money into personal accounts co-owned with his children.
Romer’s history, and history with regulators is particularly interesting.
Prior to being hired by CoreCap in October 2012, Romer was fired from two other broker-dealers for cause. Romer was also subject to at least two tax liens, prior to 2014, and also in August 2014, filed for bankruptcy.
In fact, in December 2015, Romer was suspended by FINRA for the failure to report his unsatisfied liens and judgments.
This of course did not deter CoreCap from terminating Mr. Romer, instead they waited until January 2017, and supposedly, terminated Romer for the “Failure to report outside business activity and violations of firm policies relating to transactions with clients.”
Customer complaints. however, show that the outside business activity he failed to report was P&R Capital, and the “violations of firm policies relating to transactions with clients, included stealing the client’s money.
His customers “allege that Romer solicited funds from them to invest in a firm owned by him P&R Capital. They further allege that no such investment was ever made and that Romer converted the funds to his own use.”
As of even date, of Romer’s twenty victims, only three have filed actions against CoreCap.
In July 2017, Romer was barred by FINRA for the failure to cooperate with its investigation into his activities. On August 8, 2017, the State of Michighan also barred Romer and fined him $1,000,000
According to the Michigan action, Romer convinced “Corecap customers to liquidate securities held in their Corecap accounts to make alternative investments with Respondent. However, Rather than invest the funds for the customers’ benefit, Respondent deposited the cash generated by the securities liquidations into an account that he controlled, and used the money for non-investment purposes that only benefitted him.”
In addition to its liability for the failure to supervise, CoreCap is liable to Romer’s victims under common law agency principles, including respondeat superior, and as a “controlperson” pursuant to Section 20(a) of the Exchange Act of 1934, 15 U.S.C. §78(t).
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.
Romer’s victims ought to consult qualified counsel to determine their legal rights and remedies.
Guiliano Law Group
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