Bloomberg News

Bales Had Troubled Broker Career Before Allegations

March 23, 2012

Army Staff Sgt. Robert Bales, left, at Fort Irwin and the National Training Center in Califorinia, Aug. 23, 2011. Photographer: Spc. Ryan Hallock/Defense Video & Imagery Distribution System via The New York Times/Redux

Army Staff Sgt. Robert Bales, left, at Fort Irwin and the National Training Center in Califorinia, Aug. 23, 2011. Photographer: Spc. Ryan Hallock/Defense Video & Imagery Distribution System via The New York Times/Redux

Robert Bales, the U.S. soldier suspected of shooting Afghan civilians, started selling community-bank stocks in 1996 as a 23-year-old driving a Chevy Cavalier. That may have been the peak of his financial career.

Before Bales enlisted in the Army in 2001 after the Sept. 11 terrorist attacks, he worked at five firms in five years. After he left the industry, he was hit with a $1.5 million settlement for his role in swindling a couple out of more than $600,000 from their retirement account.

“He wanted to be an investment adviser, and he had a plan as to how he was going to accomplish that,” said Robert K. Cargin, who hired Bales in September 2000 at Quantum Securities Corp. in Westerville, Ohio. “It just didn’t work out.”

Bales, 38, is suspected of killing at least 16 civilians in Afghanistan on March 11. He may face charges in military court this week, his lawyer, John Henry Browne, has said.

Cargin said in a telephone interview that he knew Bales from Diversified Capital Markets Inc., where, as a first-time broker, Bales hunted for community-bank stocks hitting the market and searched for bank directors and others interested in buying them.

“It was a good business when it worked,” said Cargin, now the financial and operations principal at Columbus, Ohio-based Capital City Securities LLC. “That was part of his plan of how he was going to make it.”

Friend and Asset

The other part, Cargin said, was to capitalize on his friendship with Marc Edwards, a professional football player who was a high-school teammate in Norwood, a Cincinnati suburb.

“Having an NFL football player as a best friend could be a launching pad for a pretty decent career, if done correctly,” Cargin said. “We gave him a shot.”

Edwards, who played for the Cleveland Browns when Cargin hired Bales, never became a client of Quantum Securities.

Edwards, Bales, and Bales’s brother Mark incorporated Spartina Investments in May 1999 in Doral, Florida. The state dissolved Spartina in September 2000 after its annual report was more than nine months late.

Edwards has declined interview requests.

“The business relationship was brief and limited,” said Marina Ein, an Edwards spokeswoman. “It ended as a result of marketplace forces and other issues.”

Bales studied economics at Ohio State University from 1993 to 1996 without graduating. According to Financial Industry Regulatory Authority records, he passed his general securities representative exam on July 18, 1996, and went to work for Diversified Capital.

Bouncing Around

Bales later worked for two companies that included people from Diversified Capital, records show. His longest stint was at Michael Patterson Inc., from March 1998 to September 1999, according to a report from the Ohio Commerce Department.

During his tenure there, Bales was accused of defrauding Gary Liebschner and his wife of Carroll, Ohio, of more than $600,000, according to Finra records. Bales sold Liebschner’s AT&T Inc. (T) shares, bought other securities and pocketed the commissions. He got $16,000 on a single day, Earle R. Frost Jr., a Columbus attorney for Liebschner, has said. Bales didn’t appear at a hearing on the case, Frost said.

Arbitrators found in a 2003 ruling that Bales “engaged in fraud, breach of fiduciary duty, churning, unauthorized trading and unsuitable investments,” according to a Finra report.

State Steps In

The Ohio Division of Securities issued a cease and desist order in August 2000 against Michael Patterson, his namesake firm’s owner, after it found that unauthorized sales and purchases of securities were made for seven clients who lost more than $500,000, according to the order and a Finra report.

Investments were made “that were not suitable for the customers, many of whom are retired, and rely on income from their investments,” the state order said.

The order doesn’t mention Bales. Telephone messages left with Patterson weren’t returned, and there was no answer at his suburban Columbus home on March 21.

After leaving Michael Patterson Inc. in September 1999, according to state records, Bales went to Capital Securities of America Inc. in Columbus, said Jerry Cline, president of the Hartville, Ohio-based firm at the time.

Bales worked there 10 months from 1999 to 2000 and then for Cargin for four months, according to state records.

“He never really got his business off the ground the way he wanted to,” Cargin said.

To contact the reporter on this story: Michael C. Bender in Tallahassee at mbender10@bloomberg.net Mark Niquette in Columbus at mniquette@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net


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