Emergency Action Taken Under Vulnerable Adult Financial Exploitation Law

Aug 7

Texas Securities Commissioner Travis J. Iles entered an Emergency Cease and Desist Order August 6 against a computer repairman who transferred nearly $28,000 from a financial account of an 88-year-old resident of Del Rio.

The cease and desist order is the first action taken by the Securities Commissioner since Gov. Greg Abbott signed into law a bill that provides additional protections for elderly Texans and vulnerable adults who may be the victim of financial scams. The law took effect Sept. 1, 2017.

According to the order, the alleged victim was living in Alpine, the West Texas town adjacent to Big Bend National Park, when he hired Mike Chamley to fix his computer. Shortly after they met, Chamley, a resident of Alpine, began trading securities in an account owned by the elderly person.

Chamley promised the individual that he would split the profits earned from trading securities. The order alleges that Chamley has not earned any meaningful profits from trading.

The securities account is maintained in the name of the elderly man at a firm registered as a dealer with the Securities Commissioner. The securities account is also linked to the credit union account of the alleged victim.

Earlier this year, Chamley was added as a co-account holder to the credit union account.

From mid-March to mid-July, $27,853 was withdrawn from the elderly man’s securities account without his knowledge. The money was withdrawn in 16 fund transfers.

As of July 25, $30 remained in the credit union account.

The senior financial exploitation law requires investment advisers and securities dealers to file a report with the Securities Commissioner that details suspected financial exploitation and permits holds to be placed on suspicious financial transactions.

On July 25, the securities dealer where the elderly man’s account is held filed a report detailing suspected exploitation. The dealer also temporarily blocked online trading in the securities account and the withdrawal of funds from the account.

The emergency order is an example of the tools the new financial exploitation law provides to combat senior fraud. As required, the registered dealer notified the State Securities Board of the suspected fraud, and the agency then secured a hold on suspect transactions in the elderly person’s securities account.

The hold prevents any transactions in the account that could benefit Chamley.

The Enforcement Division of the State Securities Board informed Chamley on July 31 that he was acting as an unregistered investment adviser – a felony offense under the Texas Securities Act.

Chamley told the Enforcement Division he planned to continue to trade securities in the elderly person’s account.

Chamley has 31 days to contest the order before the State Office of Administrative Hearings.

Reporting Vulnerable Adult Financial Exploitation

The State Securities Board has developed a form to assist financial firms in reporting critical information about the suspected exploitation of elderly and vulnerable adults. The reporting is required under Section 45 of the Texas Securities Act.

The form, which is optional, can help firms provide the most important information in situations where they suspect a vulnerable adult is being exploited.