FSC Securities will pay a $1.28 million arbitration award to investors who were defrauded by Aubrey Lee Price, who had feigned his death in 2012 to avoid being investigated for his $40 million Ponzi scheme. FSC, a broker-dealer in the AIG Advisor Group, was alleged by 8 investors to have failed to supervise a number of unnamed brokers, who sold the investors "unspecified fraudulent securities as part of a Ponzi scheme," according to FINRA's arbitration award.
John Chapman, lawyer for the investors, claimed that Price and two ex-FSC brokers solicited investments in the primary vehicle for the scheme, which was called the PFG fund. In an investigation by the FBI, the bureau found that Price started making risky investments in 2009, after he had left FSC.
Chapman claims that two FSC advisers pushed client money into the PFG fund, both of whom eventually left FSC. "FSC did a really bad job paying attention and supervision. [sic] They were asleep at the wheel," Chapman stated. The firm had "multiple opportunities to find that Price and the two other brokers were all selling away into this fund and claiming preposterous rates of return in 2008. They should have stopped it."
According to the FBI's investigation, a number of Price's customers knew him from church, where he gave lectures on how to be a smart Christian investor. The FBI stated that Price "went from a devout Christian minister and trusted financial adviser to a schemer who wiped out many of his clients' life savings and then faked his own death to avoid taking responsibility for what he had done."
Price was a broker with FSC and was based out of a suburb of Atlanta, Georgia from 2006 to 2008. Before working at FSC, he also worked for Banc of American Investment Securities, Inc. and Citigroup Global Markets Inc.
In 2012, Price feigned suicide on a boat in Key West, Florida. According to the FBI, he returned to Florida, where he grew and sold marijuana and occasionally worked as a bodyguard for prostitutes. He was arrested after a routine traffic stop on New Year's Eve in 2013.
Price has been featured on the television show "American Greed: The Fugitives" and was sentenced by a federal judge last year to a prison term of thirty years for bank fraud.
Two of the arbitrators on the panel agreed to the award, while the chairperson dissented. The panel did not award punitive damages or attorney's fees.