Community Corner

UPDATE: Redlands Broker Accused of Depleting $4.2 Million From Two Trust Accounts

Update 4:05 p.m. A lawyer for a Redlands investments broker who is accused of converting the assets of two customers, falsely characterizing transactions as loans, and transferring about $4.2 million from trust accounts to two of his friends, has responded on behalf of John Thornes and Thornes & Associates, Inc.

"The claim that John Thornes 'stole' any money is false," attorney William "Skee" Saacke of Los Alamitos said in an email. "John Thornes made short term loans on behalf of the trusts to CB and KL that were not repaid. John Thornes does not consider CB or KL friends, and has filed lawsuits against them to recover the money loaned.

"Some of the money loaned was used by KL to purchase a property in Big Bear," Saacke said. "An effort was made to place a lien on the property, at which point it was learned that the property had been sold.

"We are aware of no evidence establishing that the money loaned was used to gamble at a casino, although some of the loan checks are believed to have been cashed by CB at a casino," Saacke said.

Thornes and his business, Thornes & Associates Inc. Investment Securities, with offices on East State Street in downtown Redlands, are named in a complaint filed by the Financial Industry Regulatory Authority.
 
Posted 12:30 p.m. 
An investments broker with offices on State Street in downtown Redlands is accused of converting the assets of two customers, falsely characterizing transactions as loans, and transferring about $4.2 million from trust accounts to two of his friends, according to the Financial Industry Regulatory Authority.

"The purported loans were undocumented, unsecured, and have never been repaid," a 38-page complaint dated May 20 states. "The two trusts, one of which was established to provide care for a senior citizen suffering from Alzheimer's, and the other to provide educational scholarships to high school graduates attending college, have been largely depleted of their assets."

John Thomas Thornes and his business, Thornes & Associates Inc. Investment Securities, are named in the complaint filed by the independent regulator's Department of Enforcement.

Thornes was not available to comment for this report.

"He's not in," a representative at Thornes & Associates offices in Redlands said before noon.

An attorney representing Thornes did not respond to phone and email requests for perspective.

The complaint alleges, "As Thornes was aware, his friends CB and KL used the funds for extravagant purposes including chartering a private jet, gambling at a local casino, purchasing a vacation home, and purchasing a luxury automobile. These purported loans were to be repaid by CB within a one-year period, together with interest at a rate of between 15 percent and 20 percent per annum. After April 2012, although several of the loans were overdue and CB advised Thornes his accounts were frozen as a result of tax liens, Thornes continued to transfer trust funds to his friends through January 2013."

The offices for Thornes & Associates are at 412 E. State St. in Redlands.

Thornes & Associates, Inc., Investment Securities provides "full service brokerage and investment management services to individuals, trusts, and businesses," according to the business' website. "These services include asset allocation, portfolio development, stock selection, bond ladders, retirement accounts, retirement planning, and estate planning."

Thornes & Associates is also billed as a registered broker-dealer and investment advisor, registered with the Securities & Exchange Commission and several states, and the business is a member of the Financial Industry Regulatory Authority (FINRA), the Securities Investors Protection Corporation (SIPC), and the Municipal Securities Rulemaking Board (MSRB).

The Financial Industry Regulatory Authority is billed as "the largest independent regulator for all securities firms doing business in the United States." FINRA's mission is to protect America's investors by making sure the securities industry operates fairly and honestly. The authority oversees about 4,250 brokerage firms, about 162,065 branch offices and approximately 629,805 registered securities representatives.

FINRA has more than 3,400 employees, and offices in Washington, D.C., New York, N.Y., as well as 20 regional offices across the nation.


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