$1 million fine urged for Givens Financial guru said to violate Md. Securities Act

August 22, 1996|By Abbe Gluck | Abbe Gluck,SUN STAFF

An administrative law judge in Baltimore yesterday recommended a $1 million fine for self-touted financial guru Charles J. Givens Jr. for offering investment advice to nearly 3,000 Marylanders without being registered to do so.

Maryland's Securities Commissioner Robert N. McDonald will review the recommendation and make the final ruling in Givens' case.

The recommendation, filed by Judge Jeffrey S. Gulin, marks a victory for the attorney general's office, which requested a fine of at least $1 million for Givens because he engaged "in several thousand individual violations of the Maryland Securities Act."

Assistant Attorney General Julie Tewey said the state alleged that Givens and his company, International Administrative Services Inc., "were acting as unregistered investment advisers."

The state reached a settlement with IAS before the July 30 hearing that prompted Gulin's recommendation.

Tewey said that, after "luring" investors to seminars -- where Givens explained how he made and lost three separate million-dollar fortunes in the 1960s and 1970s -- he sold his audience memberships in two programs.

In Maryland, 1,868 people bought $900 memberships in the first half of 1993, she said, and another 1,100 paid him $400 for memberships during the same period.

Gulin found Givens in default for failing to be represented at a July 30 hearing, ordered him to permanently cease investment advisory activities and fined him $5,000 for each violation of the Securities code -- $1 million in total.

The judge also denied Givens' application to register with the state as an investment adviser.

Legal difficulties elsewhere

Givens also has faced significant legal challenges in Iowa and California.

In 1993, an Iowa jury found Givens guilty of making false claims about his past and making false statements while he gave advice he wasn't qualified to give. Givens settled that case before damages were imposed.

In May, a jury awarded the plaintiffs $14.1 million in a class-action suit filed by the 29,000 members of the Charles J. Givens Organization in California.

"He purports to have made his money by employing these strategies, when the fact is that the only money he made was by selling those strategies he puts forth," said John W. Jeffrey of Jeffrey & Dreher in San Diego, one of three law firms representing plaintiffs in the California suit.

The Maryland case began in 1993, when, after seeing advertisements for Givens' financial seminars in The Sun, the state Securities Commission charged him and his company with being unregistered advisers, Tewey said.

After Givens failed to comply with Gulin's show-cause order for documents about his activities, and failing to send representation to the hearing, Gulin found Givens in default and followed the attorney general's recommendation.

Steven Brownstein, one of Givens' attorneys, attributed the absence at the hearing to an "internal mix-up" at one of the many law firms representing Givens.

"There will be discussions with the client" concerning whether to file an objection with the Securities Commission because Givens was not represented at the hearing, Brownstein said, adding that his Coral Gables, Fla., firm was not involved in the mix-up.

But that $250,000 settlement may never reach the members of Givens' programs, because IAS declared bankruptcy in Florida in June and a bankruptcy judge must approve the settlement, Tewey said.

Proceeds from the $1 million fine the state is seeking against Givens likely would not go to allegedly misled investors, Tewey said.

"Ultimately, what we would like to do is get money back for the people.

"But in a case like this, the securities commissioner only has the authority to order fines, not restitution," she said.

Pub Date: 8/22/96

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