Arbitration case with prominent ex-Charlotte financial adviser ends in $1 million ruling

Former Charlotte financial adviser Jim Heafner and Taylor Capital Management have been ordered to pay $1.03 million by a regulatory agency after five Charlotte-area retirees say they invested with Heafner and lost more than $500,000.

The retirees had filed for arbitration with the Financial Industry Regulatory Authority, which oversees market investments, after investing in the now-bankrupt 1 Global Capital of Florida. They invested through Heafner, who sold securities as a registered agent of Taylor Capital of Georgia.

Heafner was well-known in the Charlotte area for giving financial advice on local TV stations — including WBTV, WCNC and WSOC — on the radio and in self-help books. Clients had accused him of selling unregistered financial instruments issued by 1 Global, the Observer reported in March, citing FINRA disclosures.

Among the clients making those claims are the retirees who filed for arbitration: Sandra Gizzi, James Heald, Joseph Taborek, Jerry Heath and his wife, Janet Heath, according to their lawyers with Goodman & Nekvasil in Florida. The retirees ranged in age from 65 to 76.

Gizzi, a retired electrical technician from Concord, had big hopes to travel after her retirement, she told the Observer. But she said she lost $178,000 after investing in 1 Global through Heafner.

Between July 2017 and December 2017, Heafner recommended that the retirees cumulatively invest $595,773 in 1 Global Capital, Goodman & Nekvasil said in a statement. The lawyers said 1 Global raised $287 million from various investors and filed for bankruptcy in July 2018.

The retirees were awarded $870,000 last week. That included $400,000 in punitive damages — $100,000 each to Gizzi, Heald and Taborek, and $100,000 to the Heaths. FINRA also awarded them almost $470,000 in compensatory damages.

FINRA awarded damages on its authority to pursue cases related to “fraud, intentional misrepresentation, reckless disregard of high risk and reckless disregard of securities statutes by selling unregistered securities,” according to agency documents.

Heafner and Taylor Capital were also ordered to pay $156,614 in attorneys’ fees, Goodman & Nekvasil said.

Heafner had been a registered broker with Taylor Capital from 2011 until January 2018, the Observer previously reported. Registered brokers typically buy and sell securities such as mutual funds and stocks.

In August 2018, the Securities and Exchange Commission accused 1 Global Capital and its former CEO, Carl Ruderman, of fraudulently raising money through sales of unregistered securities, the Observer previously reported.

The SEC accepted a settlement with Ruderman this summer that barred him, without admitting or denying fault, from participating in the trade of penny stocks.

‘It breaks my heart’

In the retirees’ cases, Heafner and Taylor Capital were found jointly responsible by FINRA for the damages.

“I deeply regret the 1 Global outcome,” Heafner told the Observer in a statement Wednesday. “It breaks my heart that some of my clients will lose money due to my recommendation.”

Heafner said he also invested in 1 Global and will lose money too. He did not say how much he invested.

“I wish I had never heard of 1 Global, but hindsight is 20/20,” Heafner stated.

He announced his retirement and moved to Puerto Rico around the time of the 1 Global bankruptcy, the Observer reported in March. Heafner said moving to Puerto Rico had been a longstanding plan after retirement, and he still falls under U.S. law in the U.S. territory.

A ‘devastating’ loss

1 Global investors may see some money returned after the company’s other debts are paid, Heafner said. But it’s not clear when that money will be paid.

And there’s no timeline for the retirees to get their money awarded through arbitration from Heafner or Taylor Capital.

Gizzi’s attorney, Kalju Nekvasil, said the whole experience has “been devastating to our clients, not just financially but emotionally. They trusted (Heafner).”

Taylor Capital did not respond to a request for comment. The company previously made a statement to FINRA that the firm was not advised of Heafner’s intention to sell or recommend 1 Global instruments before making a sale.

Gizzi had seen Heafner on local TV many times before investing with him, she said. “I moved all my money and gave it to him because he kept saying how safe he was,” she said.

Gizzi said she is now relying on Social Security and a pension to get by. She doesn’t know when she’ll see the money awarded to her, or any funds from 1 Global’s bankruptcy. Losing $178,000 was “devastating,” she said.

“That’s not money that was given to me,” Gizzi said. “I worked. I worked and saved all my life so that I could retire happily.”

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