Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Thursday, October 4, 2007

SEC Charges Broker with Swindling 9/11 Widow

On October 4, 2007, the SEC filed a civil injunctive action in the United States District Court for the Eastern District of New York charging a broker with fraudulently misappropriating nearly $250,000 from the widow of a Port Authority police officer who died at the World Trade Center on September 11, 2001 (the "Customer"). The stolen funds were part of the compensation the Customer received in 2004 from the September 11th Victim Compensation Fund of 2001 (the "Fund"). The broker named in the complaint, Kevin James Dunn, Jr. ("Dunn"), was employed by MetLife Securities, Inc. ("MetLife") at the time of the fraud.

The Commission's complaint specifically alleges as follows: Dunn was friends with the Customer and convinced her to invest her entire recovery from the Fund with MetLife and allow him to manage the investment. Dunn then proceeded to betray the Customer's trust by engaging in a series of material misrepresentations about the purchase and sale of securities in her account and other fraudulent acts aimed at swindling her out of a substantial portion of the compensation she received from the Fund. From September 2005 through April 2007, Dunn misappropriated a total of $248,000 from the Customer by fraudulently creating a joint account in both of their names, forging her signature on wire transfers from the joint account, and telling her outrageous lies about the status of her securities investments to deceive her into providing him with blank checks that he deposited into his own bank account. Although MetLife terminated Dunn in February 2007, he continued to defraud the Customer for another two months by acting as if he was still employed as a broker at MetLife and deceiving her into giving him additional blank checks.

Dunn is charged with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder. In the complaint, the Commission seeks permanent injunctive relief, disgorgement, and civil penalties.

In a parallel proceeding, the United States Attorney's Office for the Eastern District of New York today filed criminal charges against Dunn for the same conduct.

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