After agreeing last month to pay a $275,000 arbitration settlement related to the actions of a rogue broker,
Westminster Financial Securities is employing a unique legal strategy to renege on the award, according to the lawyer representing the 68-year-old client.
Adam Gana, partner at the law firm Gana Weinstein, filed a lawsuit Thursday in the U.S. District Court of Nevada claiming the Dayton, Ohio-based brokerage firm is in breach of the settlement agreement by saying it no longer plans to pay the award to Mary Krevosh. She was a client at Westminster for four years through June 2016.
In addition to the lawsuit, which includes email correspondence by representatives of Westminster agreeing to the settlement, Mr. Gana sent a letter to the Financial Industry Regulatory Authority Inc. requesting that Westminster be suspended for violating the settlement agreement.
According to the lawsuit, the award settlement was reached July 20, 11 days before a scheduled Finra arbitration hearing. With the settlement reached, Mr. Gana was moving forward to document the resolution by sending Finra a "letter of settlement in principal."
But, at the request of Westminster's attorney, Joseph Simms, the wording "in principal" was removed from the letter, which the suit claims removed the case from Finra's arbitration docket "in its entirety."
Mr. Simms, from the law firm Koehler Fitzgerald, declined to comment for this story, and the brokerage did not respond to a request for comment.
But, according to Mr. Gana, Westminster's legal representatives have told him they will not be honoring the agreed upon settlement award.
Finra spokeswoman Michelle Ong would not comment on the specific case. Mr. Gana said there has only been a verbal claim by Westminster's lawyer suggesting the brokerage plans to renege on the payment. If there was a written document stating that the settlement agreement will not be honored, by rule, Finra could suspend the brokerage immediately.
(More Finra news: Whistleblower claims she was fired for raising red flags about broker-dealer's alternative investments)
The settlement agreement was designed to conclude an original claim by Ms. Krevosh from April 2017 regarding her experience working with Louis Telerico, the former Westminster broker who has had his license suspended for six months through December.
Mr. Telerico could not be reached for comment.
According to Mr. Gana, Mr. Telerico misled and took advantage of Ms. Krevosh on numerous occasions.
"He recommended my client purchase a bronze bear for $200,000 from his own 95-year-old mother," Mr. Gana said of Mr. Telerico. "And my client never even got the bear."
Mr. Gana also claims Mr. Telerico convinced his client to purchase $219,000 in real estate from a business that was owned by the broker.
Ms. Krevosh also made about $50,000 worth of personal loans to Mr. Telerico, according to the complaint.
According to Finra's BrokerCheck, Mr. Telerico worked for seven different firms during a 46-year career.
He worked at Westminster Financial Services from 2012 through June 2016, when he was suspended by Finra.
From 1999 through 2016,
Finra recorded 14 customer disputes involving Mr. Telerico. Twelve of those disputes were recorded prior to him joining Westminster.
