Securities Industry Commentator by Bill Singer Esq

July 26, 2021

( Blog) adult entertainment/
BofA/Merrill Lynch alleged that it discharged an analyst for using his corporate credit card at a so-called adult entertainment venue. They also sold steak there, in case you were wondering. The thing about FINRA's regulator case is that it sure as hell didn't have much proof. What it did have was four FINRA lawyers going after some poor shlub who must have wished the floor would open up and swallow him.
Howard L. Young, 75, pled guilty in the United States District Court for the Middle District of Tennessee to an Information charging him with four counts of bank fraud, six counts of wire fraud, and aggravated identity theft. As alleged in part in the DOJ Release:

[I]n 2015, Young founded Integrative Medical Services (IMS), purportedly a holistic wellness business.  Young also held himself out to hold a Doctor of Naturopathy but did not hold a Medical Doctorate and did not have a medical license. 

As early as 2017, Young began soliciting cancer patients, investors, and employees, telling them that he had obtained a $2 million grant from Vanderbilt University to study cancer patients and other patients with chronic medical conditions.  Young claimed he was awarded this grant because he had cured himself of cancer using naturopathic methods.  Young also promised that, as part of the "study," patients would receive nutritional supplements, blood testing, nutrition and exercise coaching, gym memberships, massages, and acupuncture. For his scheme, Young targeted approximately 80 vulnerable victims, many of whom had been diagnosed with cancer or other debilitating medical conditions.

In order to participate in the "study," Young told patients that Vanderbilt required an up-front payment of $10,000 but the funds would be returned to them at the conclusion of one year.  If patients could not afford to pay the upfront money, they were required to secure a CareCredit credit card or open a Health Credit Services account.  Each of these products is designed to assist patients in paying for medical treatments and functions like a revolving line of credit or an unsecured installment loan and requires the patient to make monthly installment payments.  Young promised patients that he would hold the initial funds withdrawn in escrow and would make all monthly payments and would pay off all existing balances at the conclusion of one year, so long as the patient continued to abide by all study protocols. 

In fact, Vanderbilt had not awarded any grants to Young or IMS.  Young's representations that IMS had a grant from Vanderbilt were false and was intended to induce patients to apply for and obtain credit and loan accounts at Synchrony Bank, MetaBank, and Cross River Bank; to induce investors to give him funds for his fraudulent scheme; and to induce employees to help him solicit additional patients to participate in his fraudulent scheme.  Young even convinced one victim to transfer the title of his house to him in order to participate in the "study."

Young did not hold the money in escrow as he promised and withdrew a portion of the funds for his own personal use, made payments to his personal credit cards, and made minimum payments on account holders' credit accounts and loan accounts.  Patients did not routinely receive the nutritional supplements promised by Young, nor did they receive nutrition and exercise coaching, gym memberships, massages, or acupuncture as promised.  To further conceal his scheme, Young also changed the mailing addresses for patients' accounts at CareCredit and HCS so that the monthly account statements went to a post office box he controlled.  Young made minimum payments on the CareCredit and HCS accounts to conceal the fraud and to keep his scheme going so that he could recruit additional patients to participate in the fictitious grant study.

IMS generated little, if any, revenue. The vast majority of funds flowing into IMS were deposits from the CareCredit credit accounts and the HCS loan accounts.  By July 2019, Young had received a total of approximately $669,470 from CareCredit and HCS.
Lee appeals a November 2019 Decision by the Unemployment Insurance Appeal Board that found him ineligible to receive unemployment insurance benefits because he was not an employee of AXA Advisors LLC. In part the Appellate Division found that [Ed: footnotes omitted]: 

[C]laimant did not have a set work schedule or work location, he was not assigned a sales territory and did not have to turn in any reports. Claimant was not supervised, could work from home and could use his own computer. Claimant had to pay for the cost of his liability insurance and was not paid for any expenses. AXA required reimbursement from claimant for the cost of business cards and stationery and claimant had to pay for the use of AXA's clerical staff and office space. Claimant was responsible for developing his own client base and, although AXA would sometimes provide a sales lead, claimant testified that he did not have to pursue it. Claimant determined what products best suited his clients' needs and he could sell the products of AXA's competitors. AXA did provide claimant with promotional materials, and claimant was paid by commission, with the commission rate set by AXA or whichever company offered the product that he sold to the client.

In light of the foregoing, substantial evidence supports the Board's finding that AXA did not exercise sufficient control over claimant under the 1996 agreement to establish an employment relationship with claimant and those similarly situated (see Matter of Spielberger [Commissioner of Labor], 122 AD3d 998, 999 [2014]; Matter of Jarzabek [Carey Limousine, N.Y.-Commissioner of Labor], 292 AD2d 668, 669 [2002], lv denied 98 NY2d 606 [2002]). To the extent that the record demonstrates that some indicia of control by AXA was mandated by Financial Industry Regulatory Authority rules, such evidence alone is not dispositive of an employer-employee relationship (see Matter of Crystal [Medical Delivery Servs.-Commissioner of Labor], 150 AD3d 1595, 1596 [2017]; Matter of Bogart [LaValle Transp., Inc.-Commissioner of Labor], 140 AD3d 1217, 1218-1219 [2016]). Claimant's remaining arguments concerning the circumstances surrounding his termination and his claim that AXA owes him compensation for unpaid commissions are not properly before this Court.