According to FINRA, Kevin Cory was barred from association with any FINRA member in all capacities for intentionally misrepresenting and omitting material facts in communications with former customers.
When Cory was not registered or associated with a member firm, two former customers invested $500,000 of their retirement funds in a purported investment fund formed and managed by Cory. The fund's offering memorandum, prepared by Cory, represented the fund would invest in global equity securities with an overall long market bias. However, Cory instead used the customers' funds to make loans to small businesses, including businesses owned by Cory or managed by his friends and associates.
The small businesses, including those owned by Cory, defaulted on the loans, leaving the fund with no assets. The fund's corporate registrations were cancelled for failure to pay taxes. After Cory later associated with a firm, the former customers periodically inquired about their investment and requested account statements. Cory prepared and sent fictitious account statements intentionally misrepresenting that their investment had risen in value when it was actually worthless.
Cory also intentionally misrepresented and omitted material facts regarding the investment value, the nature of loans to small businesses, his collection efforts on overdue loans, and falsely claimed others were responsible for preparing financial information. These false and misleading communications to former customers violated FINRA's standards for communications with the public.
This case demonstrates serious fraud involving misappropriation of retirement funds and ongoing deception through fictitious account statements. The conduct is particularly egregious because it targeted a retired couple's retirement savings. Investors should be extremely cautious about investments with individual brokers outside of registered firms, should verify all investments through independent sources, and should be skeptical of consistently positive returns that are not corroborated by independent custodian statements.
