Widow Seeks $2.37 Million from Wells Fargo for Mishandling Life Insurance Payout
Posted on Wednesday, May 8th, 2019 at 1:16 pm
Wells Fargo financial advisor Leonard Kinsman (CRD# 2816535) faces a FINRA customer complaint seeking $591,916 in compensatory damages and $1,776,000 in punitive damages, plus costs and lawyers’ fees for losses sustained from mishandling a widow’s life insurance payout in speculative trading.
Kinsman has been registered with Wells Fargo Advisors Financial Network, LLC in Staten Island, New York since 2014. Previously, Kinsman was registered with Merrill Lynch, Pierce, Fenner & Smith Incorporated in Staten Island, New York from 2011 to 2014.
According to a recent New York Post article, Kinsman had a “stint at a Mafia-linked boiler room” and engaged in suspicious trades that allegedly left a New Jersey widow and mother of three with hundreds of thousands of dollars in losses. According to the claim, Kinsman mishandled a $2.25 million life insurance settlement payment made to the widow after her husband’s death in 2011. The widow entrusted Kinsman with the settlement money, and it is alleged that she wished for conservative investments that were diversified with long term growth objectives so she could live off the interest.
Instead, Kinsman invested the widow’s money on margin and traded in speculative options and non-income producing securities. It is alleged that Kinsman forged the client’s initials and set up aggressive options-trading accounts and traded risky stocks (such as Facebook) to collect fees. The client learned in 2017 that she no longer had money in her accounts, when she sought $500,000 to buy back her home at auction.
The recent complaint alleges that Wells Fargo hired Kinsman despite having prior past customer complaints and prior employment at now banned brokerage firms:
- Royal Hutton Securities Corp. in New York, New York (employed 1997 to 1999)
- Meyers Pollock Robbins, Inc. in New York, New York (employed April to June 1997)
According to the New York post article, Meyers Pollock Robbins was “a notorious and now-defunct bucket shop whose ex-president pleaded guilty after New York prosecutors charged him with orchestrating a “pump-and-dump” stock scheme. The feds, meanwhile, had alleged that the pump-and-dump sales were part of a bribery scheme coordinated by the Bonanno and Genovese crime families.”
Kinsman has been the subject of four customer complaints between 1998 and 2016 one of which was withdrawn, according to his CRD report:
October 2016. “Client alleged they were told their investment was principal protected, would be guaranteed an annual return of at least 5%, and had no fees associated with it.” The case was settled for $24,000. This case was regarding a variable annuity.
March 2008. “This verbal complaint arose out of the sale of an auction rate security (ars) that was made prior to the widespread illiquidity in the ars market that occurred in February 2008.” The case was settled for $200,626. This case was regarding an auction rate security.
May 1998. “Client was unhappy with performance with account.Filed complaint with my company,although i disagree with clients complaint.My firm decided to settle complaint with [customers].” The case was settled for $180,000.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Wells Fargo may be liable for investment or other losses suffered by Kinsman’s customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.