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When a Boy Scout offers to help a little old lady across the street, she should check her purse upon reaching the curb.That may be the message of a securities arbitration that has just been completed. The arbitrators, assessing speculative ventures peddled to an elderly, disabled San Diego woman, cited “fraud, gross misconduct, breach of fiduciary duty, and/or gross negligence” by the financial swingers who claimed they were helping her across the street.

“The panel’s biting commentary about taking advantage of an older, retired, unsophisticated client through deceit has to sting,” says Bill Singer, who writes Broke and Broker, an Irreverent Wall Street Blog and also writes for the Huffington Post.

Securities arbitration is a dispute-resolution process. Instead of going to court, parties take their arguments to a supposedly impartial, knowledgeable panel. Since 2007, such arbitrations have been handled by the nongovernmental Financial Industry Regulatory Authority (FINRA).

The victim is Martha Campbell, 63, a retired, disabled customer-service agent who had worked for San Diego Gas & Electric for 34 years as a single mother with a high school education. Her life savings were $428,000, according to arbitration papers filed by her San Diego attorneys, Bradd Milove, Brian Miller, and Paul M. Jonna.

According to Miller, Campbell was in the process of selling her $400,000 home, “but the market went against her” as San Diego home prices plummeted at the time she became ill. Finally, she decided to do a short sale, a transaction in which a lender takes less money than is actually owed on the mortgage.

Her nephew-in-law, Daniel Guillen, assisted her in the short sale. According to her attorneys’ presentation in the arbitration, Campbell “was led to believe Daniel Guillen was acting altruistically.”

But that was questionable. According to information presented at the arbitration, Guillen got $18,000 from financial operator Kevin Williams, who put her retirement money in investments that the panel considered wholly unsuitable. Williams, who has offices in La Jolla and Orange County, put $350,000 of Campbell’s $428,000 in a real estate investment called the Land Entitlement and Opportunities Fund. Williams told her that she would make $3333 a month on her money.

Campbell’s attorneys say that Guillen was a money finder for Williams — that is, one who is paid a commission to recruit investors. “Daniel Guillen is not now, nor has he ever been, a money finder for Kevin Williams,” says Guillen’s lawyer, Andrew Stilwell, who would not say how Guillen got to know Williams. At the hearings, Williams’s lawyers argued that Guillen and Williams had a business together, and that explains the $18,000, according to Campbell’s lawyers.

I also asked Stilwell if Guillen told Campbell that he was steering her to Williams for altruistic reasons. “Mr. Guillen will not comment on the facts at this time,” says Stilwell.

According to testimony at the hearing, a full $340,000 of the $350,000 was transferred to Sycamore Ventures, which was owned and controlled by David Romo, a convicted felon. In December of 2002, Romo was sentenced to a year and a day in federal prison for bank fraud and transporting stolen securities.

According to the Sacramento Bee, Sacramento U.S. District Judge David F. Levi said that Romo had pulled off “a large fraud scheme” and told him, “This was not a momentary lapse in judgment. There is something deeper in your character that allowed you to be grossly dishonest in the business world.”

Romo’s Sycamore Ventures owned raw land in an undeveloped area. The project flopped. “As best as can be determined, the $350,000 investment…is a total loss,” said Campbell’s lawyers in the arbitration.

I also asked A. Kipp Williams, the attorney for Kevin Williams, some questions about the matter. How did Kevin Williams get to know Romo? Kipp Williams didn’t know. Did Kevin Williams do his due diligence on Romo’s criminal background? “I can’t tell you that,” said Kipp Williams, who accused me of representing one of Campbell’s attorneys, Milove, and hung up the phone. I called back and Kipp Williams said he couldn’t answer most questions because of attorney-client privilege, but he did say that Campbell “didn’t understand the documents” in the short sale and that she had not opened Kevin Williams’s statements for six months.

Kevin Williams had given her a private placement memorandum and explained the risks to her, claimed Kipp Williams. She doesn’t do her homework, he said. I then asked why the arbitration panel had come down so hard on Kevin Williams. The arbitration guidelines “are very skewed toward the investor,” said Kipp Williams. There has been no decision whether to appeal, he said.

Kipp Williams’s assertion that arbitrations are skewed in favor of investors will get a strenuous argument in many quarters. For example, a nonprofit group called Project on Government Oversight told Congress in February that “FINRA’s track record…is typical of financial self-regulators that have a cozy relationship with the industry they are supposed to be regulating.” Self-regulators “have effectively been asleep at the wheel during all of the major securities scandals dating back to the 1980s,” said the oversight group to Congress, citing the Bear Stearns, Lehman Brothers, Merrill Lynch, and Bernard Madoff debacles that went undetected for years.

Guillen was not a part of the arbitration process because he does not belong to the Financial Industry Regulatory Authority. So Campbell and her lawyers are suing him in superior court, alleging securities fraud, illegal securities sales by an unlicensed broker, negligence, breach of fiduciary duty, and other transgressions.

I asked Stilwell about these charges. There has been no decision how to respond to the charges, says Stilwell. “Mr. Guillen is adamant that the allegations made in Ms. Campbell’s complaint are completely false and bordering on frivolous,” says Stilwell.

But the arbitration panel came down extremely hard on Kevin Williams, charging him with “taking undue advantage of an older, retired, financially unsophisticated, and financially limited client,” as well as placing his own needs and interests above those of his client and using “deceit and misleading and reckless behavior” in the process.

Kevin Williams and his companies must pay $397,000 to Campbell, plus $75,000 in punitive damages and $165,000 in legal fees.

“This is another chapter in the annals of Scam Diego,” says Milove. “Moral depravity is increasing.” Bandits “are emboldened by the lack of enforcement of securities laws by regulators and courts over the last ten years.”

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Comments

a2zresource Oct. 20, 2010 @ 11:46 p.m.

There really isn't anything but petition signatures and a filing fee to prevent voters in San Diego from amending the 1970 Electricity Franchise Ordinance to say that all disputes with SDG&E get settled in binding arbitration by a panel of customers. Seriously. Franchise language already exists that all agreement terms be interpreted in favor of the people of San Diego and against the franchisee SDG&E. In fact, old terms that have been replaced by amendments once called on the California Supreme Court to handle the interpretations under that same "California constitutional franchise" language.

Maybe it would help if people could, would and should walk away from any securities deal that was overly mysterious when it comes to dispute resolution, especially if those people have no say in the detailed structure of the contract. If take it or leave it, then I'm leaving, as Bauder's Rule on Fraud by Financial Complexity most likely applies.

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SurfPuppy619 Oct. 21, 2010 @ 12:17 a.m.

Bauder's Rule on Fraud by Financial Complexity most likely applies.

Good rule to follow

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Don Bauder Oct. 21, 2010 @ 5:59 a.m.

Response to post #1: Just to repeat Bauder's rule: "The essence of white collar fraud is contrived complexity." That is to say, you are told your money will be stolen in unfathomable, legalistic prose. Best, Don Bauder

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Don Bauder Oct. 21, 2010 @ 6:01 a.m.

Response to post #2: Remember, many scams are absolutely legal because the victims were informed they were going to be screwed in recondite legalese. Best, Don Bauder

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djbonin Oct. 21, 2010 @ 2:16 p.m.

Where are the Regulators here ? ha, asleep again I bet. (head shaking) why are these guys not in jail ? Un friggin believable.

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Don Bauder Oct. 21, 2010 @ 8:55 p.m.

Response to post #5: The decision was strongly worded and the payment will be a stiff one. I think justice was done -- unless for some reason the payment is not made. Best, Don Bauder

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Twister Oct. 24, 2010 @ 10:08 p.m.

Ah, HA! THAT is the ESSENCE of how slimebaggery works--just don't pay. "Small" "investors" are especially vulnerable, as they must depend upon a sound enough case, aka "open and shut," to attract lawyers on a contingency basis. Fat chance for so little reward.

This stuff is eating away at the credibility of all financial institutions and professions. That the honest ones left do not clean their own house, throw themselves on their swords, or change their line of work is a tragedy for civilization.

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SurfPuppy619 Oct. 25, 2010 @ 12:13 a.m.

But the arbitration panel came down extremely hard on Kevin Williams, charging him with “taking undue advantage of an older, retired, financially unsophisticated, and financially limited client,” as well as placing his own needs and interests above those of his client and using “deceit and misleading and reckless behavior” in the process.

Kevin Williams and his companies must pay $397,000 to Campbell, plus $75,000 in punitive damages and $165,000 in legal fees.

Here is how you cure this problem, you charge these clowns with CRIMINAL financial elder abuse-with serious prison terms.

I guarantee you this, you make one of these crooks into a flaming sign post of what happens when you rip off the old and those who are easy prey to fraud, and the problem will self correct very fast. . . . “Moral depravity is increasing.” Bandits “are emboldened by the lack of enforcement of securities laws by regulators and courts over the last ten years.” ===========

See above for instant cure of problem.

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Don Bauder Oct. 25, 2010 @ 8:50 a.m.

Response to post #7: This case is a microcosm of what is happening in the U.S. But the large financial institutions whose depredations dragged us to the edge of the abyss -- and still may push us over -- have not only NOT been punished, they have been rewarded. Best, Don Bauder

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SurfPuppy619 Oct. 25, 2010 @ 9:10 a.m.

But the large financial institutions whose depredations dragged us to the edge of the abyss -- and still may push us over -- have not only NOT been punished, they have been rewarded. Best, Don Bauder

========== Agree 100% with your coment.

I have said it many times before, those Wall Street firms, and the too big to fail banks and insurance companies, should have had their senior management prosecuted and thrown in the slammer for 20 or 30 years, ala Jeff Skilling and Ken Lay.

Make them the flaming sign post examples of what happens when you bring down the financial system of the largest country in the world.

Problem would not happen again, guarantee it.

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Don Bauder Oct. 25, 2010 @ 12:02 p.m.

Response to post #8: The DA has an elder abuse section. It's their move. Best, Don Bauder

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Don Bauder Oct. 25, 2010 @ 12:48 p.m.

Response to post #10: The big banks have been doing what Enron was doing: concealing liabilities offshore. Best, Don Bauder

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dnt1023 Oct. 25, 2010 @ 7:37 p.m.

How did a 63 year old, disabled, single mother with a high school education amass $428,000 in savings? If she had that much in savings how did she manage a short sale on her house? Isn't that for people who can't/won't make the payments? Seems she took the easy way out with the house while keeping her savings. Her lawyers did well too, $165K. I just feel she is not quite the innocent this story advocates.

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Don Bauder Oct. 25, 2010 @ 9:36 p.m.

Response to post #13: She worked 35 years for SDGE. She may have had other sources of money. I can see $428,000 in savings. She ran into trouble with the short sale. The lawyers for the people who took her money argued that she is not the innocent you think was depicted; those lawyers' statements were included in this column. The FINRA panel certainly spoke loudly and clearly. Best, Don Bauder

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a2zresource Oct. 25, 2010 @ 10:17 p.m.

RE #13:

I think this is why appellate courts try not to second-guess the trial judge's impression of witness credibility during testimony in the trial judge's courtroom.

I would say that this story was written AFTER the arbitration decision, and therefore the successful advocates were Bradd Milove, Brian Miller, and Paul M. Jonna, attorneys for Martha Campbell.

At least that seems to have been the opinion of the arbitrator about Campbell's attorneys and their presentation of the evidence.

Apparently any theory involving Campbell entrapping Williams by conspiring with Romo to lose her investment in a transaction not connected to any short sale by Campbell but to Romo's undeveloped property was not credible to the arbitrator.

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Don Bauder Oct. 26, 2010 @ 7:32 a.m.

Response to post #15: The panel of arbitrators spoke decisively after an extensive hearing. I have seldom seen such strong language in a decision. Best, Don Bauder

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northwealth Oct. 26, 2010 @ 5:19 p.m.

I find this forum interesting. Don Bauder, what is your experience in the investment markets? You have numerous miss-statements of fact in your article and yet, you attempt to enforce and opine a persona base upon your arrogance, while defaming others. I consider that narcissistic to be such enthralled in yourself. Consider this, Mr. Williams has 21 years of securities licensure, has raised over 1/2 billion dollars in his lifetime, without 1 single complaint. Ms. Campbell had 2 foreclosures on her record and $500k in retirement savings. How does a customer service rep for SDG&E qualify for a $500k home on her own? She lies. Who's gaming the system? Do you believe his, excuse me, my firm, fell down here? You must be kidding.

Are you courageous enough to return my call? post a retraction? Interview me? Print the truth? or are you a tabloid, sound-bite type of guy? -- all my best, Kevin A. Williams

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David Dodd Oct. 26, 2010 @ 6:47 p.m.

Re #17: Wow, talk about narcissism. You refer to yourself in the 3rd person and then sign your name to your comment? Tell me, how did you find this piece on you, google your own name nightly? Last question: How do them there sour grapes taste?

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Don Bauder Oct. 26, 2010 @ 8:15 p.m.

Response to post #17: Somebody working for Kevin Williams called me two days ago and asked if I would talk with him. I said that of course I would. But I didn't get a call from him until 4:45 p.m. West Coast time today (Oct. 26). I was out. I called him back as soon as I returned this evening. It was after hours so I expect to hear from him tomorrow. Incidentally, I have 46 years in the financial journalism business, beginning 1964 with Business Week magazine. The four years before that I was in the business world. I have done many columns on securities arbitrations, and many more on securities scams. I look forward to speaking with Kevin Williams. Best, Don Bauder

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Don Bauder Oct. 26, 2010 @ 8:18 p.m.

Response to post #18: Again, the decision by the arbitration panel speaks eloquently for itself. I have seen few such strong opinions. Best, Don Bauder

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a2zresource Oct. 26, 2010 @ 8:37 p.m.

RE #18:

Seems like you called this one.

It is remarkable that Kevin A. Williams cites so much about the prevailing party in what would be a rough venue to prevail in, yet he still chose to do business with her by approaching her through an intermediary with an offer of service.

Partial "smell test" time: Either Williams, sophisticated enough to raise megabucks, was taken in by Campbell's acceptance of his offered services OR Williams has just given us two out-effing-standing examples of the quality of his own due diligence that led to the arbitrator's finding.

After this, I wonder how much an attorney would charge him to even consider some sort of appeal. Maybe there's an offer coming of some serious megabucks in it for us to "forget" this comment thread?

My Baby needs a new pair of shoes... and a trip to Paris to buy them.

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SurfPuppy619 Oct. 27, 2010 @ 12:15 a.m.

Are you courageous enough to return my call? post a retraction? Interview me? Print the truth? or are you a tabloid, sound-bite type of guy? -- all my best, Kevin A. Williams

============================= Let the games begin!!!!

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SurfPuppy619 Oct. 27, 2010 @ 12:18 a.m.

Wow, talk about narcissism. You refer to yourself in the 3rd person and then sign your name to your comment?

Refried-I have to admit- I LOVE it when people refer to themselves in the 3rd person, it just cracks me up.

Ricky Henderson-best lead off hitter in the history of Major League Baseball, and former Padre- ALWAYS referred to himself in the 3rd person during interviews.

Ricky would say "Well, Ricky likes to steal 2nd base on a full count, because Ricky has the speed"...I mean it was classic stuff.

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David Dodd Oct. 27, 2010 @ 12:51 a.m.

Re #23: Sure, Surfpuppy, but if I remember correctly, Rickey Henderson never lost in arbitration ;)

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Don Bauder Oct. 27, 2010 @ 6:53 a.m.

Response to posst #21: If or when he calls this morning (Oct. 27), I will ask some questions that his lawyer wouldn't answer: 1. Did he do his due diligence on Romo? Did he know of his felony? 2. If so, why did he feel Campbell's money belonged with Romo? 3. Just what is Kevin Williams's relationship with Guillen? Supposedly they are business partners. In what? Guillen got paid, but you claim he is not a money-finder. Then what is he? 4. The arbitration panel cited "deceit" in your transaction. What do you say about that? Etc. Best, Don Bauder

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Don Bauder Oct. 27, 2010 @ 6:54 a.m.

Response to post #22: I hope they begin this morning. Best, Don Bauder

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Don Bauder Oct. 27, 2010 @ 6:57 a.m.

Response to post #23: Don Bauder has almost forgotten Rickey Henderson. Don Bauder is not even sure he knows he to spell "Rickey." Best, Don Bauder

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Don Bauder Oct. 27, 2010 @ 7 a.m.

Response to post #24: I'll bet at some point in his long career he lost the arbitration of a dispute with an umpire. Best, Don Bauder

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David Dodd Oct. 27, 2010 @ 11:32 a.m.

Re #28: Ah, but there is no arbitration with an umpire, they make a call and that's it. My reference was to salary arbitration, which was somewhat ironically linked to how good a thief Rickey was on the base paths.

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Duhbya Oct. 27, 2010 @ 2:46 p.m.

Re #29: "Ah, but there is no arbitration with an umpire, they make a call and that's it." A point to which Armando Galarraga can no doubt attest.

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Don Bauder Oct. 27, 2010 @ 3:19 p.m.

Response to post #29: You're right. I was stretching the word "arbitration" when I used it to describe a confrontation with an umpire. Really, I had tongue in cheek when I used the word in that context. I have seen enough baseball to know that there is no arbitration when protesting an umpire's decision. I am not even sure you would call football instant replays "arbitration." Best, Don Bauder

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Don Bauder Oct. 27, 2010 @ 3:22 p.m.

Response to post #30: Is he the pitcher who lost the no-hitter (or perfect game) this year because of that umpire's horrible call at first base? Thank goodness, the whole world could see the play over and over and see how blind the umpire was. Best, Don Bauder

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northwealth Oct. 28, 2010 @ 1:39 a.m.

Ricky Henderson, yes, Lou Brock = excellent, no matter what the numbers say.. As for Bauder, returned my call, yes. Thank you Don. As we discussed, your article contains miss-statements of material facts. You fail on all other requests.

For the record: Campbell did not invest with Romo. She invested into a $50 million dollar Land Fund, which, to this day, still owns the parcel(s) it purchased, including Romo's.

Due diligence? How many bloggers have money in a bank? Surprise, your bank failed. Where is your due diligence?

I bid my best to all of you. Kevin A. Williams -

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Don Bauder Oct. 28, 2010 @ 8:45 a.m.

Response to post #33: The column clearly states that $340,000 to $350,000 of Ms. Campbell's money was transferred to Sycamore Ventures, owned and controlled by David Romo, convicted felon. The column does not state that she invested directly with Romo. She invested in Williams' land fund, which transferred the money to a Romo project. There is no misstatement in the column. Kevin Williams should keep in mind that the arbitration panel concluded that he had used "deceit and misleading and reckless behavior" in "taking undue advantage of an older, retired, financially unsophisticated, and financially-limited client" to promote his own financial interests. In 46 years of financial journalism, I can't remember seeing a stronger statement by an arbitration panel. Best, Don Bauder

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Don Bauder Oct. 28, 2010 @ 11:45 a.m.

Response to post #35: I talked with him yesterday. His next move will be interesting. Best, Don Bauder

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