Just two months after publishing a May complaint against Redland, California's John Thomas Thornes, president of Thornes & Associates Inc. Investment Services, FINRA barred Thornes for the alleged theft of $4.2 million from two trust accounts.
According to the findings, Thornes effected this improper conversion of funds by falsely characterizing over 50 transactions as loans, which FINRA described as "undocumented, unsecured [loans that] have never been repaid."
One of the trusts Thornes allegedly depleted of assets was established to provide medical care to a senior citizen suffering from Alzheimer's while the other was meant to provide educational scholarships for college students.
FINRA discovered that Thornes purportedly transferred the funds to two friends with the money being used for extravagant purposes. Investigators cite as examples chartering a private jet, purchasing a luxury BMW automobile and vacation home and gambling at a casino.
Investigators found that Thornes effected these transfers by exchanging over $1 million of brokerage trust checks for cashier's checks and cash, effectively concealing the source of funds given to Thornes' friends.
The investigation concludes these transfers served "no legitimate purpose, were red flags of suspicious activity [and] should have been detected and reported through the Firm's anti-money laundering ("AML") compliance program."
Accordingly, FINRA charged Thornes & Associates Inc. with failure to investigate these red flags and with failure to implement policies, procedures and controls in compliance with the Bank Secrecy Act.
Finally, because Thornes recommended the use of margin and liquidation of conservative holdings to an account trustee (in order to finance Thornes' "loans"), FINRA charged Thorne with causing the associated trust to incur unnecessary charges and risk which were inconsistent with the trustee's investment objectives and minimal risk tolerance.
Because of Thornes' conversion and improper use of funds, breach of fiduciary duty and unsuitable recommendations, Thornes was barred from association with FINRA members while Thornes & Associates was expelled from the FINRA membership.
If you have invested with John Thomas Thornes, his firm Thornes & Associates Inc. Investment Services or with any other broker or FINRA firm whose unsuitable recommendations, deceptive activity or unsuitable recommendations have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.