FSC Securities is on the hook for a $1.28M arbitration award to investors who were swindled by a notorious con man featured on “American Greed: The Fugitives.”
FSC Securities Corp. is on the hook for a $1.28 million arbitration award to investors who were swindled by notorious con man Aubrey Lee Price, who faked his death in 2012 to escape an investigation into a $40 million Ponzi scheme.
The eight claimants alleged that FSC, one of the broker-dealers in the AIG Advisor Group, failed to supervise the unnamed brokers in the claim, who sold the claimants “unspecified fraudulent securities as part of a Ponzi scheme,” according to the award, which was issued by a Financial Industry Regulatory Authority Inc. panel on Wednesday. The $1.28 million award was for compensatory damages.
The claimants' attorney, John Chapman, said Mr. Price worked with two other former FSC brokers to get clients to invest in the main vehicle of the Ponzi, a fund called the PFG fund. According to the FBI, Mr. Price began making the risky investments in 2009, after he had left FSC.
Two of the three arbitrators agreed to the award while the chairperson dissented. The panel did not award punitive damages or attorney's fees.
Mr. Price was a broker with FSC from 2006 to 2008, according to his Finra BrokerCheck report. Prior to that, he did stints at Banc of America Investment Services Inc. and Citigroup Global Markets Inc. While at FSC, he was based in McDonough, Ga., a suburb of Atlanta.
In 2014, a federal judge sentenced Mr. Price to 30 years in prison for bank fraud.
Mr. Price, who has been featured on the television show “American Greed: The Fugitives,” could not be reached for comment.
“The fraud in which Mr. Price engaged in is extremely disturbing and FSC Securities shares sympathy for the victims of Aubrey Lee Price,” wrote Tony Vignieri, a spokesman for AIG Advisor Group, in an email to InvestmentNews. “It’s important to point out that Mr. Price left FSC in January 2008 and did not actually commence operation of his hedge fund until one year later. Several of the hedge fund investments at issue in this claim occurred in 2011, more than three years after he Mr. Price’s departure from FSC. FSC Securities had no knowledge of Mr. Price’s activities after he left the firm.”
Two FSC advisers funneled client money to the PFG fund, Mr. Chapman said. Both of them later left the firm.
“FSC did a really bad job paying attention and supervision. They were asleep at the wheel,” Mr. Chapman said. The firm had “multiple opportunities to find that Price and the two other brokers were all selling away into this fund and claiming preposterous rates of return in 2008. They should have stopped it.”
Mr. Price “went from a devout Christian minister and trusted financial adviser to a schemer who wiped out many of his clients' life savings and then faked his own death to avoid taking responsibility for what he had done,” according to the FBI. Some of his clients knew him from church; he gave seminars on how to be a wise Christian investor, according to the FBI.
In 2012, Mr. Price faked his suicide on a boat in Key West, Fla. He eventually returned to Florida, where he sold and grew marijuana and sometimes worked as a bodyguard for prostitutes, according to the FBI. He was arrested on New Year's Eve in 2013 after a routine traffic stop in Georgia.
Mr. Chapman said he has settled about 30 investor claims involving Mr. Price and won three awards for clients. He declined to state a dollar amount for the total awards and settlements.
