First, Finra, and now the SEC – a California advisor has been barred from associating with any financial professionals as part of a penalty for scamming his mother.
The SEC have imposed $9 million in penalties against John T. Thornes, an experienced advisor with 22 years in the industry including 17 as president of Thorne & Associates, his own broker-dealer in Redlands, Calif., along with $4.37 million in disgorgement, $280,000 in prejudgment interest and $4.37 million in civil penalties. In addition, Finra’s required the broker to pay $4.5 million in compensation.
Regulators discovered in late 2013 that the broker had misappropriated $4.4 million from two brokerage accounts over a number of years, with one of those feeding a scholarship trust overseen by Thornes himself and his mother, Doreen.
The other account – the Schultz Trust – was established in 1996 to pay for the care of 77-year-old Belva Jeanne Schultz who suffered from Alzheimer’s. Schultz was a friend of Ms. Thornes.
Mom asked her son to manage the account for her as she was financially naïve. As trustee, John Thornes converted the Schultz Trust to a margin account generating big revenues for himself and his firm.
Between April 2011 and March 2013, the former advisor liquidated $1.7 million of the $2 million in the Schultz Trust and moved the funds to Christopher Burnell, a personal friend.
The advisor knowingly took money from a woman who depended on the funds for her very survival and passed those funds to a friend with a gambling problem, all the while deceiving his mom who had entrusted him with the funds in the first place.
The facts on the other trust account aren’t any rosier.
In November 2010 the Harbison Trust Account was valued at $3.05 million. By the time John Thornes had gone to work enriching both Burnell and another friend, Kyle Larick, the account had dropped in value to $500,000, a sliver of the value only three years earlier.