Finra arbitrators this week ordered a barred broker to pay $5.7 million to investors he allegedly defrauded in a private placement involving a medical facility.
While he was a registered representative in Independence, Iowa, in 2012, Dana Vietor began soliciting investments through an offering under Regulation D, which governs unregistered securities, to buy a building in Dallas to house cancer treatment and other equipment. Vietor continued to procure investments in the operation through 2020.
Ownership of the building transferred to an entity controlled by Vietor and his then son-in-law. Instead of providing medical services itself, the company that Vietor set up rented the building out to other firms that delivered the treatment.
That arrangement didn’t generate the return promised to the claimants in the Finra arbitration, said their attorney, Gail Boliver, owner of an eponymous law firm in Marshalltown, Iowa.
“In fact, it’s impossible to make money because the service they bought into is now being rented out,” Boliver said. “It was a constant losing operation.”
The 13 claimants, some of whom surrendered annuities to buy shares in the offering, alleged that Vietor never provided them with financial information about the investment. They also alleged that he and CFD Investments Inc., a Dallas brokerage where he worked from 2016 to 2018, did not keep them apprised of their financial condition and did not take supervisory action to protect investors.
In their statement of claim against Dana Vietor, Ashley Vietor and CFD Investments, the claimants cited misrepresentation, fraud, breach of fiduciary duty and breach of contract, among other causes of action.
The Finra arbitrators held Dana Vietor liable for $4.3 million in compensatory damages and $1.4 million in attorneys’ fees to 12 of the investors, according to the Nov. 28 award. He also was ordered to pay $1,941 in costs and the $800 filing fee for the arbitration claim. One of the investors had his claim dismissed. The claims against Ashley Vietor and CFD Investments also were dismissed, as was the counterclaim by the Vietors against the investors.
“It was a very fair result,” Boliver said. “It reflects a significant amount of the losses sustained by the investors.”
Finra has made private placements a regulatory priority for many years. A new rule went into effect on Oct. 1 that requires brokers to file with the broker-dealer self-regulator all retail communications related to private investments.
Vietor will try to overturn the decision.
“Mr. Vietor respectfully disagrees with the award, maintains that he did not engage in any wrongdoing as to the claimants, and is reviewing his options to vacate the award,” said his attorney, Andrew Shedlock, a partner at Kutak Rock.
Vietor resigned from CFD Investments in 2018 after fraud allegations by customers. Finra barred him from the industry in 2020, according to his BrokerCheck profile. He worked for 13 firms over 31 years and had 18 regulatory disclosures.
As more active strategies get packaged into the ETF wrapper, advisors and investors have to look beyond expense ratios as the benchmark for value.
Survey finds AI widely embedded in research and analysis, but barely touching portfolio construction or trade execution.
Two firms land teams managing more than $1.1 billion in combined assets from Kestra and Edward Jones.
A private partnership, Edward Jones is a giant in the retail brokerage industry with more than 20,000 financial advisors.
Meanwhile, Raymond James and Tritonpoint Partners separately welcomed father-son teams, including a breakaway from UBS in Missouri.
Wellington explores how multi strategy hedge funds may enhance diversification
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
