A broker booted from Next Financial is under investigation by the police in San Antonio for his role in an alleged theft of about $1.5 million from an elderly couple.
The broker, Jeremy McGilvrey, was fired from Next Financial Group Inc. of Houston in May for “borrowing money from a client,” according to records with the Financial Industry Regulatory Authority Inc. of Washington and New York. Having such a relationship with a client is a significant violation in the brokerage industry.
Mr. McGilvrey has not been arrested, but the police are investigating the matter as are local securities regulators, said Cliff Herberg, first assistant district attorney for the Bexar County District Attorney's Office in Texas.
“The state securities board has interviewed him once,” Mr. Herberg said.
Repeated calls to Mr. McGilvrey's firm, Hill Country Wealth Inc. in San Antonio, went unanswered.
Mr. McGilvrey is also being sued by the couple — Thomas H. Crouch, 93, and his wife, Dorothy, 89 — from whom he allegedly stole the $1.5 million. Mr. Crouch suffers from severe Alzheimer's and dementia, and Mrs. Crouch is being treated for depression and memory loss.
"These guys were grabbing money with both hands," said the couple's son James Crouch, who is an attorney in Houston. The alleged theft has three parts, he said: a $500,000 loan from the couple to Mr. McGilvrey and his firm, the couple's $500,000 purchase of stock in Hill Country and $500,000 that is simply missing.
James Crouch alleged that his parents were also overcharged fees of $130,000.
He became guardian for his father and stepmother in March, and he became suspicious of Mr. McGilvrey around that time and worked to uncover the alleged fraud.
On behalf of his parents, James Crouch filed a lawsuit against Mr. McGilvrey last week in Bexar County Probate Court in San Antonio. The suit also names Hill Country Wealth and other Hill Country executives.
James Crouch said an amended complaint could be filed this week that would include Next Financial, and he is also working to determine whether to sue LPL Financial of Boston, where Mr. McGilvrey was affiliated before joining Next in June 2008. Other clients of Mr. McGilvrey have contacted him about the matter, James Crouch said.
According to Finra records, Mr. McGilvrey was “permitted to resign” from LPL last year after he failed to supervise properly a registered rep and for not reporting a business transaction.
Executives with Next Financial did not return calls for comment, and a spokesman for LPL declined to comment.
Next Financial recently has had problems with securities regulators as well as deals that have gone afoul.
Last month, Finra fined Next Financial $1 million for failures to supervise its network of some 130 branch managers, also known as Office of Supervisory Jurisdiction in the independent-contractor-broker-dealer industry.
Next Financial was also one of a number of independent broker-dealers with advisers selling private securities of an oil and gas partnership, Provident Asset Management LLC of Dallas, that the SEC charged last month with committing a $485 million fraud.
Mr. McGilvrey is a person of some note in San Antonio. According to a report in the San Antonio Express-News on Sunday, he was the featured “financial planning expert” on the website of WOAI News 4, a local television and radio station.
He also has appeared regularly in advertisements for Hill Country Wealth, the paper said. According to filings with Texas securities regulators, HCW Asset Management LLC of San Antonio, has no client assets.