Gaps in Coverage
This is a sidebar to this week's feature, "Wize Guys"
In some cases, there are discrepancies between employee credentials boasted on GlobalTec's Web sites and records from the Texas State Securities Board and the National Association of Securities Dealers. In other cases, employees' implied expertise in securities fails to mention limited job history in that industry.
Karl Haas, 37
From GlobalTec's Web site: "Before joining GlobalTec, Karl was a broker for three years with a series 7 and series 63 license."
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From the Texas State Securities Board: Haas resigned from TD Waterhouse in 1999, after failing the Series 7 exam three times. He was with the firm for nine months. He then worked at Fidelity Brokerage Services for just over a year. He passed the Series 7 and Series 63 exams in 2000 but was registered for only part of his time at Fidelity. Previous jobs included sales and delivery for a company called Haas Distributors, assistant restaurant manager at Bristol Hotels&Resorts in Dallas, and manager of an inline skating retail store. In 1993, Haas pleaded guilty to felony possession of hashish and misdemeanor possession of marijuana. A Navarro County district court gave him deferred adjudication, and after five years' probation the case was dismissed.
GlobalTec spokeswoman Dori Madison stated Haas's profile contained a typo, and that he wasn't licensed for three years. When Haas was interviewed for GlobalTec's inaugural "GlobalTec Talk" newsletter in 2003, he stated: "I was a customer service rep at Fidelity."
Shamus O'Connor, 36
GlobalTec: "Shamus earned his BS in business administration from the University of Massachusetts. Shamus has more than 10 years experience trading stocks, options and foreign currencies. He was a licensed financial advisor/stock broker for a major Wall Street firm for three years and formerly held series 7 and 63 licenses."
TSSB: In 1997, O'Connor resigned from the Houston branch of Josephthal, Lyon & Ross, a New York-based broker-dealer. He resigned after a customer accused him of unauthorized trading. Prior to that, O'Connor worked for 13 months at Lew Lieberbaum & Co., a Long Island brokerage. Before that, he was a country-club bartender in Coppell, Texas; a waiter at a Dallas Pappasito's and "head bartender" at a Dallas TGI Friday's.
Between 1992 and 1996, the NASD cited Josephthal, Lyon & Ross three times for securities violations. In 2001, the NASD ordered the firm to pay $3.3 million after finding that, in the 1990s, brokers were paid extra to push stocks in a troubled technology company owned by the firm.
In 1998, Lew Lieberbaum & Co. paid a $1.75 million settlement in a complaint filed by the U.S. Equal Employment Opportunity Commission. The commission accused firm managers of discriminating against women and blacks, as well as hiring strippers for office parties. The firm closed its doors shortly afterward.
O'Connor was not accused of wrongdoing in these two incidents.
Madison stated "we don't know" why O'Connor quit the firms.
Blake Morrow, 33
GlobalTec: The president of 4X Made Easy, Morrow previously "managed six-figure trading accounts in a day trading operation and was a co-owner of a Dallas-based day trading firm."
TSSB: In 1996, after five months at the Phoenix branch of the Joseph Charles & Associates brokerage, Morrow resigned with a $2,055 debit. Prior to that, he was a bouncer at a college bar in Tempe, a salesperson at a Guess? store in Mesa and a waiter at a Phoenix Hilton.
Joseph Charles & Associates filed for bankruptcy in 2000, after years of individual and regulatory complaints of fraud and illegally urging customers not to flip their shares in initial public stock offerings.
From 1996 to 1998, Morrow worked at the Mesa-based Carrington Real Estate Planning. In 2004, Richard Dean Carrington pleaded guilty to theft for peddling fake life insurance policies on AIDS patients. The charge came after a five-year investigation of Carrington Real Estate Planning and Carrington Investment Services by the Arizona Corporation Commission. Carrington agreed to pay $3.1 million in restitution.
Morrow's TSSB record indicates he was an indirect owner and employee of the Dallas brokerage Centerpoint Securities. The NASD censured Centerpoint in 2003 for failing to prevent a broker from committing fraud, and for running a securities firm without required minimum net capital.
Morrow was not accused of wrongdoing in the regulatory complaints against Joseph Charles or the policy scam in Arizona.
Madison stated "we don't know" what Morrow did at Carrington Real Estate and why he quit Joseph Charles.
Mark McDonnell, 48
GlobalTec: McDonnell is described as the first Wizetrade customer and developer of Charts With Mark, "an intensive chart analysis training tool." McDonnell is also described as "a former trader with a major brokerage firm."
TSSB: McDonnell quit the Dallas branch of Fidelity Brokerage Services in 1999, after 28 months with the company. From 1990 to 1997, he was a project manager at the Dallas branch of Fluor Daniel GTI, an environmental services company. From 1987 to 1990, he was a project engineer at another Dallas firm.
George Thompson, 40
GlobalTec: Thompson founded GlobalTec after he "built" a trading firm in Dallas. He's also the author of Don't Play in the StreetUnless You Know Which Direction Your Stock is Traveling.
TSSB: Commissioner Denise Voigt Crawford: Thompson "is not registered with us, he has never been registered with us, and I'm prohibited by law from confirming or denying the existence of an investigation."
Dallas Better Business Bureau: In his application to the BBB, Thompson identified himself as the president and owner of All Tech Investment Group. He did not include an address, length of operation or business description.
Federal Trade Commission: Thompson began selling Wizetrade in 1999 under the name "Wave on Wall Street" through an affiliate of a Dallas-based company called 2xtreme Performance International, which ostensibly sold nutritional products. However, the Federal Trade Commission accused the company's founder, John Polk, of running a pyramid scheme, and the company folded in 2000. By that time, Polk was already in jail for an unrelated charge of fraud connected to his real-estate infomercials.
Thompson was not a defendant in that case and, according to the FTC's file, appears to have helped the commission's case against 2xtreme. In a declaration filed with the FTC, Thompson said the company's founder had begun pre-selling the Wave on Wall Street to "distributors within the company." Thompson said he warned Polk that the product was not ready to be sold.
But Thompson appeared in an infomercial for the product, a partial transcript of which is in the FTC's files. Thompson is identified in the infomercial as "the co-founder of one of the largest day-trading firms in the U.S." Also appearing in the infomercial is Peter Hirsch, a co-defendant in the FTC's suit against 2xtreme.
Sometime later, Thompson sold the Wave on Wall Street through a company called ROI Analytics. The company's Web site, available on the Internet archive www.archive.org, describes Thompson as a "widely known lecturer and five-year veteran of daytrading as well as position trading."
Thompson, the company's vice president, is the only employee identified. However, the Web site boasts that "the combined experience of the principals span some 46 years in the securities industry."
Two Dallas computer programmers claim to be the co-inventors of Wave on Wall Street.
John Lovelace says he and Tony Benton developed a prototype for a stock-market-trend analysis program to aid day-traders. Lovelace says he gave the idea to his friend, 2xtreme founder John Polk.
"It was actually my test program," Lovelace said from Dallas. "It's not something I ever would've thought going out to market with."
Madison stated that Lovelace and Benton only marketed the software.
All Tech Investment Group was a day-trading empire created by New Jersey investor Harvey Houtkin. In the 1990s, All Tech became the country's largest trading firm, touting itself as "a good place to start a full- or part-time career." According to the San Diego Union-Tribune, the NASD in 2001 ordered Houtkin to repay customers $456,000 for downplaying the risks of day-trading. Court records showed that Houtkin lost $392,000 in day-trading activities in 1998, but made millions off All Tech's customers.
In 1999, Atlanta day trader Mark Barton, who lost $500,000 in deals at All Tech and a neighboring firm, killed his wife and two children before slaying nine and wounding 12 of the firms' employees. Survivors and family members sued All Tech and the other firm for negligence, accusing the companies of leading Barton to financial ruin and causing the rampage. The suit was dismissed.
Thompson was not involved in the Houtkin suit or the Atlanta tragedy.
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