Fallout continues in LV Merrill Lynch scandal

Brian Seals

Tuesday, Oct. 6, 1998 | 11:27 a.m.

Las Vegas stockbroker Janie Thomas and her husband Bobbie Thomas Jr. remain at large, four years after securities fraud charges were leveled against them.

Authorities say they have heard rumors the couple headed south to Mexico to avoid prosecution on one count of racketeering and 40 counts of securities fraud.

Janie was a broker with Merrill Lynch while Bobbie was a financial planner trainee. They are accused of duping Merrill Lynch customers out of $16.5 million -- and the fallout from the case continues today.

The couple's former boss, J. David Glover, was fined $5,000 last week by the U.S. Securities and Exchange Commission. Glover was the Las Vegas branch manager for Merrill Lynch in 1994.

The SEC said Glover failed to respond to warning signs of fraud by a broker in his office. The broker engaged in excessive trading in client accounts and sent false statements to clients.

The broker wasn't identified by the SEC. But those were the same kinds of charges leveled against the Thomases. And two years ago, Glover agreed to pay a $1,000 state fine related to the Thomas case.

That same year, Merrill Lynch paid $150,000 to the state to finance investor education programs and paid $16.5 million to investors in Las Vegas and Southern California who were duped in the scheme.

Officials said Janie Thomas had told clients she had set up offshore accounts and then inflated the value of those phony accounts.

One of Janie Thomas' clients, who spoke on the condition of anonymity due to a settlement agreement signed with Merrill Lynch, last week indicated the fines against Glover were well deserved.

She said the large amount of trading conducted in her account by Janie Thomas should have tipped off the broker's superiors.

The client said that in 1994 she repeatedly tried to contact Glover about the trading activity in her account, but he was continually out of the office.

"I could have nailed Janie Thomas three or four weeks before the story broke," the client said. "Those people had to have known, they had to know."

She said Thomas put her in bonds, then would sell them at a loss and later buy them again.

"She was taking all these bonds and Glover didn't know it? Come on," said the client.

"I'm still suffering from that girl's investments," the client said.

Glover, 41, now lives in Largo, Fla., and is no longer in the securities business, said his attorney Richard Morvillo.

Glover failed to confirm with the broker's customers that they were aware of the high level of activity in their accounts and that they were losing large amounts of money while generating large commissions, the SEC alleged in an administrative complaint.

Glover agreed to pay the $5,000, be suspended from the securities business for three months and be restricted from supervising any brokers for an additional six months. He neither admitted nor denied the allegations.

Morvillo, a partner with Crowell & Moring in Washington, said his client "decided to put this controversy behind him and move forward with his professional life."

FBI and state securities officials say the Thomases' car was found at Los Angeles International Airport shortly after the allegations of wrongdoing surfaced.

Charles Moore, director of enforcement for the state securities division, said that if the couple left the country it's unlikely they returned to the United States.

"With their car at LAX they're probably still on the run," Moore said.

The Thomases' assets have been seized, including a $750,000 bank account, a house and townhouse.

Bloomberg news contributed to this story