FINRA charged Thornes & Associates Inc. Investment Services President John Thomas Thornes (Redlands, California) with the improper conversion of $4.2 million. Thornes is accused of misappropriating the $4.2 million from two trust accounts, including one established to provide care to a 77-year-old Alzheimer's patient.
Instead of the funds being used to provide such medical care, the investigation states Thornes and his friends used the ill-gotten funds for gambling at San Manuel Casino, chartering a private jet, purchasing a vacation home and acquiring a luxury vehicle.
Disciplinary Proceeding #2012030567401
According to the findings, Thornes engaged in the misconduct from 2010 through January 2013, falsely characterizing over 50 transactions out of two trust accounts as "loans," though these "loans" were undocumented, unsecured and to this date have never been repaid.
FINRA accused Thornes of "breaching his ethical obligations and fiduciary duties as trustee for the senior citizen trust" by allegedly pilfering the funds through the aforementioned loans as well as using margin. Thornes allegedly recommended each trust use margin at interest rates from 3.75% to 6% before selling off the trusts' conservative investments, both moves that FINRA deemed unsuitable for the trusts.
Investors also charged Thornes with willfully failing to report his role as trustee on his FINRA Form U4.
Thornes allegedly attempted to conceal the source of ill-gotten funds by exchanging over $1 million of brokerage trust checks for plain cashier's checks and cash with Citibank, Wells Fargo Bank and Security Bank of California, actions that should have been identified by the firm's anti-money laundering compliance program as "red flags."
Instead, FINRA found, Thornes and his firm failed to implement such anti-money laundering policies and procedures that could have detected the misconduct.
For instance, the findings state that $262,327 of these funds were paid, by cashier's check, to San Manuel Casino.
If you have invested with John Thomas Thornes, his firm Thornes & Associates Inc. Investment Services or with any other broker or firm that may have engaged in misconduct such as improper conversion of funds or unsuitable recommendations and such activity has proven harmful to your interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.