James and Lorraine Conaway Sanctioned for Real Estate Outside Business Activity Violations, Disclose Failures

FINRA fined and suspended James "Jim" Otis Conaway and Lorraine Annette Campbell Conaway aka Lorraine Annette Espinoza for violations related to Tycon Properties, a real estate company the pair established as an outside business activity while associated with USA Financial Securities Corporation of Tustin, California. FINRA charged the Conaways with disclosure failures related to Tycon Properties Inc., as well as two additional companies pertaining to rental properties, STL100 and Ten Vest.

Both were affiliated with JP Turner & Company, LLC, of Tustin and Brea, from 2011 through 2015, whereupon they joined USA Financial Securities, and previously co-hosted Smart Money Talk Radio on KCAA, a KNBC affiliated show in southern California. The couple is also involved with Conaway & Conaway Wealth Advisory Group (C&C Wealth Strategies) of Orange County.

AWC #2016048484001

According to the findings, James (CRD #1920946) and Lorraine (CRD #2104502) Conaway referred interested individuals to real estate vendors through their Tycon business, receiving a fixed referral fee from the vendors for each transaction that resulted. Investigators noted that some of the persons the Conaways referred were securities customers of JP Turner and USA Financial.

One of the Tycon website's Frequently Asked Questions, for example, was, "Can I buy real estate in my IRA?" (The answer was, "Yes and there are strategies to use your IRA and still get tax advantages.")

The report states that in 2013, the Conaways formed a business relationship with a new vendor that was controlled by a person that had previously pleaded guilty to federal charges of financial wrongdoing and had received a prison sentence as a result.

Investigators found that in spite of this criminal background, by 2015, approximately one-third of Tycon's business referred clients to this vendor's program, resulting in over $450,000 in referral fees for Tycon.

Unsurprisingly, the investigation found that by 2015, some of the rental properties associated with this vendor were not performing or were underperforming, and that furthermore, customers had begun to complain about this particular vendor.

Rather than terminate Tycon's business relationship with the troubled vendor, the report states that the Conaways expanded Tycon's business activities to include oversight of the vendor's real estate program, and negotiated concessions with the vendor on behalf of dissatisfied clients, even going so far as to form and use their STL100 entity in 2015 to make an acquisition from a dissatisfied client.

The findings state that the Conaways failed to disclose that they had offered to purchase an additional rental property through STL100 from a JP Turner customer in an attempt to bring this client to USA Financial.

FINRA found that the Conaways' initial written disclosure to USA Financial pertaining to Tycon was incomplete and inaccurate, and that the Conaways failed to timely disclose STL100 and Ten Vest to the firm.

When the firm attempted to review and evaluate the STL100 and Ten Vest outside business activities, the Conaways allegedly provided incomplete and inaccurate information, and failed to disclose that certain transactions involved their securities clients.

USA Financial discharged the Conaways in May 2016 for failing to comply with firm advertising and outside business activity procedures, participating in financial transactions with securities customers, and for failing to cooperate with the firm's internal investigation.

If you have invested with former JP Turner & Company and USA Financial Securities brokers James Otis Conaway and Lorraine Annette Campbell Conaway, or with any representative or financial adviser who has engaged in an inadequately disclosed outside business activity, and the associated unauthorized transactions of unapproved products 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.

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