A Finra arbitration panel has awarded a retired securities attorney a settlement of $966,000 for alleged “negligent” investment advice he received from an advisor who has since disappeared.

Paul V. Gerlach, the former attorney, was a client of Charles A. Knott, an independent investment advisor who is no longer registered, according to Finra Broker Check and legal documents. In 2013, after their association began, Knott joined Sentinel Capital Solutions, an RIA firm in Hagerstown, Md., that the legal documents say was owned by Cort Frederick Meinelschmidt, a registered broker at Capital Investment Group in Raleigh N.C.

That September, Knott allegedly recommended to Gerlach an investment in Hard Rock Exploration, a privately held oil and gas extraction company that operated in West Virginia, calling it a "terrific and extremely advantageous opportunity” that would provide guaranteed monthly income for 30 years, the legal documents say.

In June 2014, Gerlach received notice of risks involved in the investment, the settlement says. Nevertheless, a month later, he allegedly invested $1 million in the drilling program. From that investment, Capital Investment Group earned a $90,000 commission, of which some $59,000 went to Meinelschmidt personally, according to the legal documents. Knott, however, received no additional compensation from the investment other than his normal salary, the documents say.

Then, in 2017, Knott resigned from Sentinel Capital Solutions under unrelated allegations that he had failed to follow internal policies and procedures, according to the SEC. Also that year, Hard Rock filed for Chapter 11 bankruptcy protection, the settlement says.

Gerlach’s investment vanished, and he filed a complaint with Finra, charging Knott, Meinelschmidt, Capital Investment Group, and Sentinel Capital Solutions with negligence, breach of fiduciary duties, failure to supervise investment transactions, violation of obligations, and related allegations.

He requested more than $1 million in compensation to recoup his investment, plus interest, attorney fees, and other damages.

By mutual agreement of Gerlach and the co-respondents, the dispute was referred to an independent arbitration panel in Washington, D.C., under Finra guidance.

In testimony, Meinelschmidt stated that Sentinel could not offer shares of Hard Rock Exploration because it was not a broker-dealer. Furthermore, he acknowledged that the mine company did not actually offer guaranteed income, as Gerlach had been promised. Gerlach allegedly responded that he was never informed about these inaccuracies.

The arbitrators determined that Meinelschmidt, Capital Investment Group, and Sentinel are jointly and severally liable to pay Gerlach $966,072.00 in compensatory damages.

Knott, however, could not be located for the arbitration proceedings and consequently “took no part” in them, according to the legal documents. “None of the participants in this matter knew whether Mr. Knott is alive or whether he was of sound mind,” the documents say.

Attorneys for Gerlach, Meinelschmidt, Sentinel and Capital did not respond to requests for comment.