Investor Wins $593,125 in Case Against Broker
Arbitrators ordered a San Diego County broker to pay $593,125 to an 84-year-old man who claimed he was duped into buying risky and ultimately worthless bonds instead of the safe, income-producing investments he expected.
A National Assn. of Securities Dealers panel ruled March 6 that Mark F. Augusta misled and defrauded Robert H. Lundquist of Joshua Tree, a retired chemical engineer. The panel awarded $243,125 in compensatory damages and $350,000 in punitive damages, plus $240,000 in attorney’s fees.
Lundquist purchased investments in the late 1990s including bonds of Heritage Healthcare of America, underwritten by Augusta’s employer at the time, Miller & Schroeder Financial Inc. The bonds, which were supposed to finance nursing homes for Alzheimer’s patients, eventually went into default.
Lundquist’s wife “had been institutionalized for 10 years” with Alzheimer’s, said his attorney, Bradd L. Milove of San Diego. “The pitch was that it was a safe investment that also would help other Alzheimer’s victims.”
Augusta, who had worked in Miller & Schroeder’s Solana Beach office, is now employed at the La Jolla office of U.S. Bancorp Piper Jaffray Inc. He didn’t return a call to that office Wednesday and his attorney, Steven M. Green of San Diego, declined to comment.
The case is part of a cluster of complaints by investors who bought Heritage Healthcare bonds from Miller & Schroeder, a Minneapolis investment firm that is liquidating its assets in bankruptcy proceedings. Henry H. Rossbacher, a Los Angeles-based lawyer for Miller & Schroeder, couldn’t be reached for comment.
Lawsuits on behalf of the bondholders seek damages from Miller & Schroeder and dozens of firms and individuals affiliated with it and Encino-based Heritage.
Those claims, alleging the defendants overstated assets, lied about their personal histories and shifted funds among Heritage properties in violation of bond covenants, have been incorporated into the Miller & Schroeder bankruptcy proceedings, Milove said.
