Saturday, March 09, 2002
Fiorini case sets new bill in motion
Lawmaker wants restitution power
By James McNair, firstname.lastname@example.org
The Cincinnati Enquirer
A Tristate legislator who represents a number of people defrauded by George Fiorini's 10 Percent Income Plus Plan has taken the first step to empower Ohio to pursue restitution for victims of future investment scams.
Ohio Rep. Wayne Coates, D-Forest Park, asked the legislative staff Friday to draft a bill giving the Ohio Division of Securities the authority to wrest ill-gotten gains from investment swindlers in civil cases. That's something that the state's 89-year-old securities act currently does not allow.
Unlike most states, including Kentucky and Indiana, Ohio puts the responsibility on investors to file suit to recover money lost to securities fraud. Money can be recovered through criminal charges and through court-appointed receivers, but neither of those actions was taken in the Fiorini case, in which investors are out more than $15 million.
After reading an Enquirer story Friday, Mr. Coates said he was quite aghast that we (the General Assembly) had a chance to do something about it in 1978, but didn't, a reference to a failed bill to give the state restitution-seeking powers. We have to empower the division to do it.
Mike Ward, a retired Avon Products worker who lives in Mount Healthy, has $380,000 worth of Fiorini-brokered promissory notes in a company called Guardian Investments. He was pleased to hear about Mr. Coates' action, even though it's too late to help him.
It sounds good, Mr. Ward said. The state should be protecting the people because the people are paying taxes.
To succeed in making law, Mr. Coates will need some help from the General Assembly's Republican majority. After the bill is drafted, he said he will seek co-sponsors in both parties.
An issue as strong as this should at least be favorably heard, Mr. Coates said. The more affluent tend to have the money to invest, so I would expect my Republican colleagues to find benefit in this bill.
Consumers should not be further victimized by the system and have to fight in court when they have no money.
Another Greater Cincinnati representative who sits alongside Mr. Coates on the House Financial Institutions Committee, Jean Schmidt, said she is sensitive to the plight of defrauded investors, but had no comment on the proposed bill because she wasn't aware of it Friday.
Should the state of Ohio be the one to do the litigation, I don't know, Ms. Schmidt, R-Loveland, said. But we need to help people understand they've got to be really cautious when they invest their money. This kind of fraud is a problem.
Forty-two other states have adopted all or part of the Uniform Securities Act, which give state securities commissioners stronger policing powers, including the right to seek restitution and fines. A spokesman for Ohio Securities Commissioner Debbie Dye Joyce said she has no interest in it because Ohio's 1913 securities code provides adequate regulation and enforcement of the securities industry.
Bob Croskery Sr., co-chairman of the Cincinnati chapter of the American Association of Individual Investors, said Ohio needs to take a hard look at its investor safety net.
It is my view that Ohio should get in step with the rest of the country, he said. Whenever government sides with anyone, it should side with the weak, the powerless, the ignorant and the elderly.
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