Floridas top financial regulator will step down this summer and South Florida securities lawyers, who say theyre seeing an ugly resurgence of boiler-room stock fraud and bucket-shop commodity swindles, are calling on Gov. Rick Scott to name a replacement who will beef up state regulation.
J. Thomas Cardwell, a longtime lawyer and banking industry insider whos been in the job since 2009, notified Scott and Cabinet members of his departure plans in a May 16 letter obtained by Broward Bulldog. He wrote that after nearly two years in Tallahassee, it is now time for me to return home to my family in Orlando. He offered to stay on until a successor is approved, provided that this can be accomplished by Aug. 31.
Florida Chief Financial Officer Jeff Atwaters office confirmed receipt of Cardwells resignation letter. We anticipate doing a nationwide search for a replacement, said Atwaters press secretary, Alexis A. Lambert. He said Atwater was not available for comment.
Cardwells predecessor was fired after an embarrassing series of disclosures by The Miami Herald about regulatory failures of the Office of Financial Regulation that allowed criminals to obtain licenses as mortgage brokers. The disclosures, amid the nations mortgage foreclosure crisis, led to new state licensing standards and background checks for loan originators in Florida.
In his letter to the governor, Cardwell said the Office of Financial Regulation is now ably staffed and functioning well.
But Broward attorneys who make a living representing fraud victims dont share Cardwells view about the soundness of financial regulation in Florida. They say that under Cardwell, enforcement of Floridas securities laws has lagged and scams that target the elderly and others have flourished.
Theres no question that mortgage fraud has been a hot topic over the last few years, but in the meantime weve seen a proliferation of boiler rooms in South Florida, said Scott Silver of Blum & Silver in Coral Springs. The securities side has been neglected.
South Florida has a reputation as a kind of wild, Wild West of securities fraud for a reason, said former federal prosecutor David R. Chase of Fort Lauderdale. There is a need for institutional change at the state and a new direction to really target some of the more vicious and systemic frauds. The continued focus on isolated rogue brokers misses the bigger picture.
Such criticism is stoked by the Office of Financial Regulations reputation as being slow to respond to investor complaints or take action to stop bad brokers from harming investors.
Attorney Jeffrey R. Sonn, of Fort Lauderdales Sonn & Erez, said, Ive been doing this for 25 years and I never really saw the state of Florida as the cop in terms of rooting out fraud. They dont show up until long after something goes bad and the moneys gone.
The state is not aggressive at all when it comes to protecting people, said Russell L. Forkey, a veteran Fort Lauderdale litigator.
The Office of Financial Regulation, with a $43 million budget and about 450 employees, regulates the state banking and securities industries. It also is responsible for the licensing, examination and enforcement of mortgage brokers, money transmitters, payday lenders, check cashers and car loan outfits.
The last search for a financial regulation commissioner was marked by intrigue.
Broward Bulldog reported in March the story of St. Petersburg securities lawyer Kevin Carreno, whose 2009 bid for appointment as Floridas top financial watchdog was derailed after, he says, he threatened to expose regulators for failing to uncover the multibillion-dollar Ponzi schemes of Bernard Madoff and Allen Stanford.
On Monday, Carreno would not say whether hell apply again for the post. When its announced. Ill have to take a hard look.
The governor and Cabinet, sitting as the Financial Services Commission, have the duty to appoint Floridas top financial regulator. By law, Scott and Atwater must agree on that person.
Lawyers for victims say theyd like the important post to go to an attorney who has represented investors, can define an effective anti-fraud policy and deploy the offices resources to implement it.
Instead of an industry insider, we need someone with experience in helping small investors, said Silver.
Until the criminal element realizes that the cost of engaging in securities fraud has gone up significantly, there is no reason to stop, said Chase.
Given the prevailing political climate, however, attorney Sonn thinks the chance for real change is slim.
Rick Scott is all about building jobs with little or no regulation. I cant see how anybody he appoints will have a mandate to get the job done, Sonn said.
Broward Bulldog is a not-for-profit online-only newspaper created to provide local reporting in the public interest. www.browardbulldog.org 954-603-1351
