Securities Lawyers Blog
The law offices of Gana Weinstein LLP are currently investigating claims that advisor Ronald Hannes (Hannes) has been accused by a financial regulator of engaging in converting client funds among other allegations. According to records kept by The Financial Industry Regulatory Authority (FINRA) Hannes was employed by his prior employer Woodbury Financial Services, Inc. (Woodbury Financial) prior to being investigated concerning his activities. If you have been a victim of Hannes’ alleged misconduct our firm may be able to assist you in recovering funds.
In December 2019, Hannes was terminated by Woodbury Financial for cause after the firm received notice from a client that funds were paid to the representative for purchase of a life insurance contract that were not forwarded to the life insurance company.
Thereafter, FINRA investigated Woodbury Financials’ disclosures and Hannes refused to cooperate with FINRA. FINRA found that Hannes consented to sanctions and findings that he failed to produce documents and information requested by FINRA during its investigation into allegations that he converted customer funds.
In March 2020, the Securities Division of the State of Washington filed a complaint against Hannes alleging that from approximately 2003 to 2019, Hannes engaged in an extensive, long-term fraud against his Woodbury Financial clients by convincing them to write checks to Hannes Financial Services, Inc. for off-the-books investments and then used the money for other purposes. In total, Hannes is alleged to have defrauded at least nineteen clients out of at least $2.9 million.
The State of Washington alleges that Hannes generally approached existing clients and misrepresented to them that he had an opportunity for a fixed-rate investment in either a bond, or in a unit investment trust which functioned similarly to a bond. It is alleged that Hannes did not provide investors with any offering documents for to the investments or financial statements and in some cases did not even identify the company in which the client would be investing. Instead, it is alleged that Hannes most commonly stated that the investments offered a return of 5% to 7%, and could be rolled over into new investments at the end of their fixed terms in the two-to-five-year range. Investors are then alleged to have been solicited to roll over their investments rather than requesting withdrawals. Hannes is alleged to have had the clients write the checks to HFS, whose bank accounts he controlled as the owner of the company. Hannes is then alleged to have created false account statements and company names to provide the appearance that actual investments had been made.