Finra has charged a 44-year-old financial advisor with allegedly defrauding several investors out of thousands of dollars which he then used to fund his own personal projects. The Financial Industry Regulatory Authority (Finra) has charged a 44-year-old financial advisor with allegedly defrauding several investors out of thousands of dollars which he then used to fund his own personal projects.
James Scott McKee of Eugene, Ore., was arrested on Feb. 9 by officers from the Eugene Police Financial Crime Unit and charged with four counts of first-degree aggravated theft, defrauding customers of at least $370,000 and improperly using at least $650,000 of customers' money for his own benefit, Eugene police said.The Eugene-based newspaper Register Guard today reported that Finra filed a 27-page complaint against McKee. The complaint claims that McKee between February 2008 and 2011 committed aggravated theft by deception with the sale of unregistered securities; the unauthorized liquidation of monies from investment accounts by a financial planner; the unauthorized deposit of those funds into the financial planner's personal bank account, and concealing the liquidation.
Since February 2008, Finra claims that McKee has allegedly sold unregistered securities, liquidated monies from investment accounts without authorization, deposited that money into his own account and concealed the transactions, according to police. Three investors who did business with McKee have reported losses of $584,000.
Beset by personal financial troubles including bankruptcy, Finra claims McKee preyed upon a handful of victims, including an 81-year-old retiree, a local church and the owner of a small office-supply company.
In one case, Finra alleges McKee persuaded a customer to give him $100,000 that he promised would be invested in a real estate venture. Instead, McKee used it to pay off another customer who was threatening to sue him.
In another case, McKee advised a local church, a first-time investor looking for a safe, conservative investment, to put money into Bedrocks Coffee, a coffee house in the Coburg Station shopping center in Eugene, according to Finra. The unidentified church lost its $100,000 investment when the coffee house filed for bankruptcy in November.
Coburg Station, which includes Chipotle Mexican Grill and other tenants in the 400 block of Coburg Road, is owned by Uptown Development No. 1. McKee and Steve Master, a prominent local developer, are listed as managers in Uptown Development No. 1 in a filing with the Oregon Secretary of State's Office. McKee owned half the shares of Uptown Development No. 1, and "his primary role was to raise private investment at a time when real estate ventures were having difficulty raising money," Finra's complaint said.
Along with Coburg Station, Uptown Development No. 1 also developed the Uptown Plaza shopping center in the 1600 block of Coburg Road.
In its top advisor rankings in 2010, Barron's ranked McKee fourth in the state of Oregon. The magazine reported his firm was Quality Financial group and that he managed $500 million in assets.
To fund these ventures, McKee solicited investments from his former clients at LPL Financial Corp., where he was affiliated until September 2008, then from his clients at Berthel, Fisher & Co. Financial Services, where he affiliated from September 2008 to November 2010, the complaint said. McKee's relationships with those firms and others proved short-lived.
Finra alleges that McKee solicited clients without the approval of those firms and without disclosing to investors that he was an owner in Uptown Development No. 1, according to the complaint.
To attract prospective investors, McKee falsely claimed in promotional materials that he was an attorney, although he never graduated from law school and never passed the bar exam.
McKee also worked for Morgan Stanley Smith Barney from December 2010 until September 2011, when the brokerage fired him for persuading a customer to invest in an outside business venture owned by McKee without the firm's knowledge or approval.
In that case, McKee persuaded the client to invest $100,000 in Ventis
Investment Properties, a company owned by McKee that invested in local
residential properties, the complaint said.
McKee lied to the client, saying that Ventis invested in assisted living facilities in Springfield, when the company actually only owned a small office building and a small undeveloped lot, the complaint said.
Finra is seeking for McKee to pay to-be-determined fines, give up any ill-gotten gains and return his victims' investments, plus interest. It could take several months before the panel issues a finding.
McKee has 25 days to file an answer and to request a hearing before a panel of Finra hearings officers.