Friday, July 28, 2000

Broker stole money from elderly, suit says

PaineWebber accused of allowing it

By Robert Anglen
The Cincinnati Enquirer

        An 82-year-old Cincinnati woman isn't thanking PaineWebber. She's just hoping to get something back from the firm after a broker allegedly stole $1 million from her dead husband's investment account.

        Lawyers for Betty Ginsburg say she is one of sever al senior citizens in four states victimized during the last 10 years by the firm whose slogan is, “You'll say, "Thank you, PaineWebber.'”

  In a filing this year in federal bankruptcy court, former PaineWebber broker Richard Zenni lists nine instances of “money wrongfully taken.”
• $1.2 million from the estate of Sam Ginsburg, Cincinnati.
• $500,000 from Mr. and Mrs. Phillip Ritter, Cincinnati.
• $260,000 from Rosella Fink, Buda, Texas.
• $250,000 from Mr. and Mrs. Richard Gebing, Cincinnati.
• $230,000 from Mr. and Mrs. James Hepp, Cincinnati.
• $200,000 from Mr. and Mrs. Joseph Talamo, Cape Coral, Fla.
• $135,000 from Mr. and Mrs Gerald Fasse, Highland Heights, Ky.
• $50,000 from Patricia Wilson, Fort Thomas
. • $40,000 from Aletha Hamilton, Cape Coral, Fla.
        While securities broker Richard Zenni could not be reached for comment, he listed nine of his former clients as creditors in a Chapter 7 bankruptcy filed this year in federal court. Next to each name is the notation: “Money wrongfully taken.”

        Cincinnati FBI spokesman Ed Boldt confirmed Thursday that Mr. Zenni is the subject of a federal investigation that began last October “in connection with his stock brokerage employment.”

        In a suit filed Wednesday in Hamilton County Common Pleas Court against PaineW ebber, lawyers representing the Ginsburg estate say the brokerage firm and its local branch manager should be held responsible.

        “PaineWebber aided and abetted the theft by encouraging Zenni to befriend elderly investors, by recklessly failing to monitor Zenni's criminal conduct and by recklessly failing to monitor its clients accounts,” the suit says.

        A PaineWebber lawyer in New York said Thursday that company officials would not comment on the case.

        Local PaineWebber manager Richard Wilhelm — who is named in the suit — did not return calls Thursday.

        “Our key in this case, is that the supervisor in charge of watching this guy ... was not watching the store,” said Cincinnati lawyer Stan Chesley. “This started in 1992 and they didn't discov er it until after (Mr. Ginsburg) died.”

        The suit asks for a jury to determine compensatory and punitive damages. In the suit, Mr. Chesley charges that PaineWebber “had knowledge that Zenni was stealing from clients.”

        Specifically, he points to Mr. Zenni's opening and closing of accounts, his relationship with elderly clients and transactions involving PaineWebber accounts.

        Mr. Ginsburg, who died last year at age 95, was a prominent Cincinnati lawyer whose career spanned nearly 75 years.

        The suit says Mr. Zenni befriended the Ginsburgs and effectively took over their financial affairs. It says Mr. Ginsburg was pressured into opening a joint checking account with Mr. Zenni for the purpose of selling stocks and other investments.

        After those transactions were made and the proceeds were deposited into the account, Mr. Zenni allegedly withdrew funds and deposited them into his own account.

        The suit says the broker hid the theft by preparing false statements and brokerage accounts, by intercepting account information and by adjusting Mr. Ginsburg's tax returns.

        “Zenni further concealed his criminal conduct by making false payments of income and dividends to Mr. Ginsburg,” the suit says.

        As a result, Mr. Ginsburg's widow has been put in a financial hardship, Mr. Chesley said.

        “She was always told that she would be well taken care of,” he said. “Now she is in serious financial straits.”


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