SEC Bars Former Adviser Convicted of Racketeering and Exploiting a Vulnerable Senior
The Securities and Exchange Commission has barred former adviser Gary Edward Haynes from the securities industry who had been found guilty by a Michigan state court of racketeering and exploiting a vulnerable adult.
According to the SEC, the victim was 97-year-old widow with no children at the time of the trial in December 2018, and was between 90 and 94 years when Haynes transferred approximately $300,000 from her financial accounts between March 2011 and September 2015 to businesses owned by Haynes.
The evidence showed that Haynes withdrew a total of $303,656.34 from the victim’s accounts. He did not deny making the withdrawals but insisted that the victim knew about the withdrawals and authorized them and that the withdrawals were for an investment in real estate or were personal loans from the victim to him. He pointed out that the victim signed all documents necessary to affect a transfer of funds from her account and that he never forged the victim’s signature. He also testified that the victim kept a journal of all withdrawals from her account, and that he counter-signed journal entries that evidenced the loans to him. In addition, he testified about a $116,353.90 promissory note he created on April 5, 2011, to memorialize the personal loans he took from the victim, which was originally due on April 5, 2015. He added that the note was orally modified to extend the due date to April 2019, when the victim would be 98 years old. However, he kept the promissory note to himself.
The jury convicted Haynes on fourteen counts: count one (conducting a racketeering enterprise), count two (embezzlement from a vulnerable adult – $100,000 or more), counts three to ten (embezzlement from a vulnerable adult – $1000 or more but less than $20,000), and counts eleven to fourteen (filing a false or fraudulent tax return or payment).
According to the SEC, the court sentenced Haynes to 90 months to 20 years for counts one and two, and 30 months to five years for counts three to 14, to be served concurrently.
In addition, the SEC says that because Haynes “poses a continuing threat to investors,” they concluded that it is “in the public interest to bar him from association with any investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization.”
According to the SEC, the jury instructions and verdict show that Haynes was convicted of one count of exploiting a vulnerable adult for $100,000 or more, eight counts of exploiting a vulnerable adult for $1,000 or more but less than $20,000, and one count of racketeering. These documents also show that, to convict Haynes of racketeering, the jury must have found that Haynes committed at least two instances of embezzlement by an agent.
Haynes became a registered adviser in 2010 and was affiliated with Cherry Investment Advisors Ltd. from 2011 to 2015. He was later affiliated with First American National Investment Advisors LLC from 2015 to 2016.
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