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Finra Claim in Securities America Case

Finra Claim in Securities America Case

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Published by DealBook
Ewald Groetsch's claim against Securities America, seeking arbitration by the Financial Industry Regulatory Authority.
Ewald Groetsch's claim against Securities America, seeking arbitration by the Financial Industry Regulatory Authority.

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Published by: DealBook on Mar 04, 2011
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03/04/2011

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BEFORE
THE
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.
Case Number
(9
EWALD F. GROETSCH, SR.
CLAIMANT,
-VS..
RONALD JOSEPH CARAZO and SECURITIES AMERICA, INC.
RESPONDENTS.
STATEMENT OF CLAIM
Ewald F. Groetsch, Sr. ("Claimant"), through undersigned counsel, states the following
claims against Respondents Ronald Joseph Carazo ("Carazo") and Securities America, Inc.
("Securities America")' pursuant to the FINRA Uniform Code of Arbitration:
1.
Claimant is an 84-year old retiree suffering from Alzheimer's Dementia. Prior toHurricane Katrina, Claimant had lived in the same house that he owned in Metairie, Louisiana
for nearly
50
years.
Claimant has
5
grown children, 9 grandchildren, and 3 great-grandchildren.
As a result of Claimant's current medical condition, he now resides full-time with one of his
adult sons and his family, who assist in all of Claimant's day-to-day care.
Carazo and Securities America are collectively referred to as the "Respondents." "Securities America" refers to
Securities America. Inc. and its current or former officers, agents, representatives and employees (including Ronald
Joseph Carazo or any member of his team), and any predecessor or successor firm thereto.
28961 lv.3
 
2.
Respondent Securities America is headquartered at 12325 Port Grace Boulevard
Lavista, Nebraska 68128, but it maintains an office in Metairie, Louisiana. Securities America is
a wholly owned subsidiary of Ameriprise Financial, Inc.On its website, Securities America
claims to be "one of the nations largest and most successful independent general securities
broker/dealers."
Securities America's Advisory Division was founded in 1993 and is an SECRegistered Investment Advisor firm with over $13 billion in assets under management. Amongother representations on its website, Securities America promises its customers that they can
"rest assured that the advice and guidance you receive [from Securities America's "independent
financial consultants"] is based on what's best for YOU, and not because your advisor is
hindered by a limited range of products or a corporate mandate dictating what they can sell or
do."
3.Respondent Carazo held himself out as a representative of Securities America and
as "President" of "Ron Carazo and Associates, LLC." He claimed to have a special expertise inassessing the investment needs of Claimant.Carazo has been a registered representative of
Securities America since August 1992.
Accordingly, Securities America had the ability to and
did control Carazo's actions.Carazo's actions are attributable to Securities America, and
Securities America is responsible for all of Carazo's actions complained of herein.
Carazo's
commission-generating status caused Securities America to look the other way at Carazo's
behavior.
4.
In or around 2002, Claimant met Carazo at a financial seminar conducted byCarazo at a local hotel.
Claimant was 77 years old at the time. From the outset of the
Page 2
28961 lv.3
 
relationship, Carazo was an extremely aggressive salesman. Eventually, he was able to convince
Claimant to turn over the management of a significant portion of his investment portfolio to
Carazo.
He repeatedly told Claimant that he could improve the "deficiencies" in Claimant's
portfolio and advised Claimant that he was always looking out for Claimant's "best interests."
5.
Carazo knew that because of Claimant's age and medical condition that Claimant
relied heavily on his children (primarily, his son Mike and his daughter Jeanne) for advice andassistance, particularly in connection with his financial affairs. In fact, on multiple occasions,
Claimant,
Mike, and Jeanne (and even one of their attorneys) requested that Carazo
communicate directly with Mike and Jeanne regarding Claimant's investments.
But Carazo
refused.
Despite multiple requests, Carazo routinely contacted Claimant-and worse, secretlysold him investments and made questionable financial transfers-without consulting with Mike
or Jeanne.
6.
Based on Carazo's advice and aggressive sales tactics, Claimant invested several
hundred thousand dollars in (i) promissory notes issued by Medical Capital Holdings, Inc. or its
affiliates (the "Medical Capital Notes") and (ii) real estate investment trusts from Inland Western
and Behringer Harvard (the "REITs").
These investments were highly speculative and
expensive, and they were certainly not suitable for a retiree in his eighties that was suffering
from Dementia.
7.
Carazo convinced Claimant that the Medical Capital Notes and REITs were safe
and secure.
Page 3
28961 Iv.3

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