State says man defrauded elderly
Washington state officials have intervened to stop a man accused of scamming the elderly and trading securities without a license.
The Washington state Department of Financial Institutions recently filed a cease-and-desist order and notice of a $30,000 fine against Fran Austin, of Austin & Associates. The order alleges that Austin offered securities without a license and defrauded three senior citizens out of a total of $96,000. Two seniors were in their 80s and died shortly after giving Austin thousands of dollars for supposedly guaranteed returns that never materialized.
The department’s filing accuses Austin of skimming some money for personal use and losing other money on risky, speculative options trading.
Martin Cordell, chief of enforcement for the department’s securities division, said seniors are attractive victims because they usually have some savings and are typically at home near a phone, and thus easily accessible.
“The majority of our cases with investment fraud involve seniors,” Cordell said, adding that churchgoers are also routinely preyed upon.
Austin, a Spokane resident, once was a partner in Rosenberry Austin & Associates Inc., a company licensed since 1980. Austin has been licensed to sell life and disability insurance in Washington since 1969. There are no phone listings for Austin or his company, so he couldn’t be reached for comment.
Rosenberry died in 2003, and in 2004 Austin persuaded several longtime clients to invest money with him.
An 86-year-old widow “with little or no investing experience” was talked into selling an annuity valued at $60,000. The annuity was originally purchased from Austin in the 1990s and represented most of her life’s savings, according to the Department of Financial Institutions.
After signing a contract that promised a 10 percent return and the entire investment back in a year, the unnamed investor sold the annuity – incurring an early withdrawal penalty of $6,000 to $7,000.
The department’s filing alleges that Austin took $10,000 of the woman’s money for personal expenses and lost $50,000 on bad options trades, which are the right to buy or sell securities for a specified price at some point in the future. The woman died six months after entering into the transaction.
An 82-year-old retired chemical salesman, living in an assisted-living home, invested $5,000 after signing a contract that guaranteed an 8.75 percent return. Austin deposited the money in a personal account and spent it in a month, the order said. His client died shortly afterward.
Austin persuaded an 84-year-old retired waitress who lives alone to give him $31,000, promising an 11.25 percent return, the order said. He transferred $11,000 of her cash into his personal account, the order said.
Local records also list lawsuits filed against Austin in 2002 and 2004 claiming money owed. One plaintiff was listed as Unifund CCR and the other as CACVO24.
Cordell said people should realize that investing is risky. He cautioned that they should diversify their investments and never risk money they can’t afford to lose. It pays to question everything, Cordell added, and investors should research the person handling their investments to make sure they’re licensed.