As previewed in our last News Blast, this month's case study involves an individual seeking investment capital who was named as the debtor in a 2008 $34 million judgment.

But this judgment, in connection with aiding and abetting securities fraud, was just the tip of the iceberg as our subsequent investigation of his partner revealed not only financial problems, but years of fraudulent activity. Court records disclosed a pending 2008 fraud complaint filed against this partner by the Securities & Exchange Commission (SEC) which resulted in a $650,000 lien against his property. However, this property was already attached in a previous judgment for $720,000 awarded to the SEC in a 2001 action for violating securities laws by selling company shares in exchange for "kickbacks."

The SEC reported that no part of that judgment had been paid, and its current action was brought to set aside the allegedly fraudulent conveyance of the subject's property to his wife. Further, in 2002, the SEC issued an order permanently barring this subject from association with any broker-dealer. SI then obtained records from the state Attorney General's Investor Protection Bureau which detailed a history of more securities fraud and improprieties dating back to the mid-1980s, including seven consumer complaints for unauthorized trades with damage awards of up to $100,000.

The subject's employment history also was provided in these records and revealed four terminations from employment between 1987 and 1997 for causes involving unacceptable sales tactics and practices, fraudulent trading activity, misuse and wrongful taking of company property, and allegations of forged customer signatures on account transfers. Perhaps the most astonishing was a 1998 entry indicating that the subject consented, without admitting or denying any allegations, to a finding by the National Association of Securities Dealers (NASD) that he arranged to have another individual take the Series 27, Financial and Operations Principal Qualification Examination on his behalf.

In the second week of October, Governor Arnold Schwarzenegger vetoed California AB 943, which would have restricted the ability of employers to use credit reports in hiring decisions.