Sign of the Financial Industry Regulatory Authority

LPL Financial was sued last week in Phoenix for its role in an affinity fraud case involving members of a local church and an ex-broker who allegedly stole $5 million from at least 40 victims.

The lawsuit alleges that the broker, James Buchanan, was able to steal $382,376 from an elderly married couple because LPL “completely failed in its supervisory and compliance duties regarding” Mr. Buchanan, whose wife, Lori, was also named in the lawsuit.

Lawsuits and Arbitration Claims Against Buchanan & Firms Rise

Lawsuits and arbitration claims against him and LPL of Boston are stacking up in the wake of a criminal investigation against the adviser.

Ameriprise Financial Services Inc. of Minneapolis, where Mr. Buchanan was registered from 1994 through January 2006, is also named in arbitration complaints.

In May, he was charged with one count of fraud and 14 counts of theft, according to an indictment filed with the Maricopa County Superior Court in Phoenix.

Each of those is a felony charge.

Since then, Mr. Buchanan was freed on a $350,000 bond andhHis lawyer, James Belanger of Phoenix, did not return a call to comment.

According To The Lawsuit

In the lawsuit, from Oct. 14, which was also filed in the Maricopa County court, the couple, Warren Atkinson, 84, and June Atkinson, 79, claimed that Mr. Buchanan wiped out what was left of their life savings and that they lived from month to month on Social Security checks.

“Since 2001, Buchanan took advantage of his victims’ religious faith and trust in him as a leader in his church,” according to the lawsuit.

“In some instances, Buchanan lied to widows to steal the proceeds of their deceased husbands’ life insurance proceeds.”

From January through May 2007, Mr. Buchanan told the Atkinsons that he would put their money in LPL investments that would earn 8.5% interest annually, according to the lawsuit.

Affinity Fraud

Affinity fraud is a scam that preys upon members of an identifiable group, such as a religious community.

Because Mr. Buchanan never opened a brokerage account for the Atkinsons, they have the ability to file a civil claim against LPL and him in court rather than in a securities arbitration, said James D. Burgess, an attorney with Fennemore Craig PC in Phoenix, who is representing the Atkinsons and at least one other elderly couple in a separate lawsuit.

LPL Financial denies the allegations,” said spokesman Kevin Dinino.

“The firm has retained counsel and will vigorously defend itself. LPL Financial fired Mr. Buchanan in March.”

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 you 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.