By Ann Henson Feltgen, BrowardBulldog.org
A Broward County probate judge has nipped an alleged attempt to redirect a $3 million inheritance intended to care for four beloved show dogs following their owner’s death.
Judge Mark Speiser threw out financial advisor Charles E. Bishop’s claim as inheritor of the estate and froze the $3 million account.
Now, the Financial Industry Regulatory Authority (FINRA), a non-governmental agency that oversees investment companies, has charged Bishop, of Pompano Beach, with attempting to misappropriate the money when he was a broker with Merrill Lynch, Pierce, Fenner & Smith, Inc. in Fort Lauderdale.
“Bishop deceived the customer into believing that the money in her account would be transferred, after her death, to a company that she created to care for her prized show dogs,” say FINRA records. “Bishop’s scheme was foiled when a probate court refused to permit the transfer.”
A hearing on the regulatory complaint is set for Sept. 10, according to Bishop. If found guilty, he could be expelled from the securities industry and have to pay hefty fine. He could also face criminal charges if an adverse ruling is forwarded to prosecutors.
Bishop said he is innocent. “I’ve been trying to get a hearing for three years,” he said. “These are unsubstantiated allegations, they are very distorted.”
He declined further comment.
ELDERLY COUPLE AND PRIZED POOCHES
According to the FINRA complaint, in 2005 Bishop began handling the investments of Fort Lauderdale residents Stephen and Elizabeth Lupe, an elderly, childless couple.
Elizabeth Lupe had a passion for her four purebred Bouvier dogs, which regularly competed on the dog show circuit.
To ensure the dogs a comfortable life after the couple’s deaths, in2006 Elizabeth formed Dancing Bear Kennel, which would receive the family’s assets. According to FINRA, Bishop handled the paperwork for the corporation and its account.
Stephen Lupe, 77, died January 5, 2009, as his wife’s health was failing from a terminal illness.
Elizabeth Lupe “did not wish to leave her money to Bishop,” says FINRA’s complaint. Still, on Feb. 9 she signed a pair of Merrill Lynch documents that appear to have set Bishop up to inherit her $3.2 million brokerage account.
A Merrill Lynch “client relationship agreement,” restated Dancing Bear Kennel as her beneficiary, but listed the company’s federal tax identification number as “applied for” when, in fact, it already had a tax number. A separate “transfer on death form,” providing for an immediate transfer of assets upon her death, named as beneficiary an entity with a slightly different name, Dancing Bear Kennel I.
Elizabeth Lupe’s signature is on the transfer form, but she “was not present before the notary when the signature was notarized,” the complaint says.
IRS records list Bishop as the “sole member” of Dancing Bear Kennel I, according to the complaint. The entity was issued a federal tax number, but was never incorporated as a business. Nevertheless, state records show that on Feb. 11 Bishop incorporated yet another similarly named entity, Dancing Bear Dog Kennel LLC, listing himself as sole managing member.
A DOCUMENT IS ALTERED
On Feb. 19, three days before Elizabeth Lupe’s death and 10 days after she executed the client relationship agreement naming Dancing Bear Kennel as her beneficiary, the agreement was “altered,” the complaint says.
The words “applied for” were removed and the new tax identification number for Bishop’s new entity, Dancing Bear Kennel I, was added, the complaint says. Lupe did not acknowledge the change with her initials.
“Bishop’s actions assured that the paperwork at his firm made him the inheritor of (Lupe’s) Merrill Lynch brokerage account outside the probate process. He did this just after her husband died, and a few days before (her) own death,” the complaint says.
Broward Probate Judge Speiser was assigned the case.
One of the judge’s first actions was to freeze all accounts at the urging of Elizabeth Lupe’s close friend Irene Roussos, who feared she may have been taken advantage of and that the estate would be bled dry.
Records show that two days after the accounts were frozen, Bishop hired Miami attorney Richard C. Milstein, who filed a notice that his client was an interested party and claimant to the Lupe estate.
Court-appointed Estate curator Laurence Blair, an attorney who specializes in wills, trusts and estates, and his Deerfield Beach attorney Marc J. Gold took on the case. In early March, Gold researched whether “a person who is licensed to sell securities can be a beneficiary of a client’s account, which he opens up in the client’s name,” according to the court documents. The pair also reviewed documents for Dancing Bear Kennel.
Speiser threw out Bishop’s claim and ordered the money transferred to Blair’s care. The show dogs, Hot Shot, Party Girl, Lulu and Hoorah, were placed in adoptive homes and the $3.2 million divided among Elizabeth Lupe’s cousins.
Bishop says he did nothing wrong because he never received his client’s inheritance money.
But records show that Merrill Lynch fired him in April 2009 for violating company policies regarding his attempt to inherit assets from the account of a deceased client. In January 2011, an arbitrator found Bishop liable for breach contract with the company and ordered him to refund nearly $1 million of his sign-on bonus, plus interest and attorney’s fees.
Bishop filed for bankruptcy a month later and those debts, and others, were discharged in December.
DOGGED BY COMPLAINTS
Bishop has made his living managing client investment accounts.
In all, 11 complaints have been filed against Bishop with FINRA, three of which are still pending.
Currently he is an independent financial contractor at National Asset Management in Boca Raton – a firm not regulated by FINRA. Bishop says he makes $15,000 a month.
Florida’s Office of Financial Regulation investigated Bishop when he applied to be a registered agent with National Asset Management, but approved him on the condition the firm place him under “strict supervision.”
Bishop worked for Morgan Stanley in Fort Lauderdale from 1998 to 2008. While there, he was accused of misrepresentation in a bond purchase. A claimant was awarded $40,000 plus interest.
Bishop then went to work for Merrill Lynch after getting a nearly $1 million sign-on bonus, court records say.
He apparently did well.
According to records filed during a Broward divorce proceeding filed in 2008, Bishop had two kids in private schools, an expensive water-front home in Pompano Beach, two rental properties in Fort Lauderdale, two boats, a condo in Myrtle Beach, South Carolina and was the half-owner of another condo in the Florida Keys. His annual income was upwards of $300,000.
But Judge Alfred J. Horowitz noted that Bishop had improperly bought one of the Fort Lauderdale rental properties with a client, a professional conflict of interest. To hide the conflict, the judge said, Bishop put his wife’s name on the deed.
In another instance, the judge wrote, Bishop “recommended to his clients to buy [Myrtle Beach condos in the same development as his] so that he could get a discount on his unit.”
Bishop, said Horowitz, “is motivated by his self dealing sometimes on the back of his clients.”