Finance adviser faces discipline

An Everett investment adviser has been accused of violating the state’s Securities Act by misrepresenting investments that ultimately cost a number of people large amounts of their retirement funds.

The Securities Division of the Washington Department of Financial Institutions says it intends to order Robert J. DeGroot Jr. to cease and desist his investment business, suspend or revoke his securities registration and pay fines for his violations.

Deborah Bortner, state securities administrator, said her agency is still talking with DeGroot about the charges.

"We are in the process of negotiating with him and trying to figure out how to resolve this," she said. "Sometimes we end up fining people. Sometimes we try to get people’s money back. A lot of times there’s no money left."

DeGroot was not immediately available for comment Tuesday.

Among those who lost money with DeGroot were Barney Spielman, a former Alaska fisherman from Arlington who now lives in Arizona. He said he lost some $270,000 with DeGroot in investments that supposedly were backed with real estate.

One investment was supposed to pay 12 percent interest and use the money to build moderately priced homes in two California communities. "It sounded like a sure thing," Spielman said.

State officials say DeGroot, who was paid a 9 percent commission on the investments, told Spielman and others that the investment was safe because it was secured by real estate.

It wasn’t, and the company defaulted on its notes.

Another client, Nadine Loth, lost about $20,000 that she invested with DeGroot after she took an early retirement from GTE and received a lump sum payment.

She said DeGroot was referred to her by her credit union and that he sounded like a good investor. But over time, she said, her statements didn’t appear to be accurate and interest payments were often delayed by several months.

"I got scared and went to Washington Mutual Bank," she said. "He (a bank advisor) looked at my portfolio and said, ‘You need to go to an attorney.’"

Loth, who also lives in Arizona now, said she did hire a fraud attorney and got back all of her retirement funds with the exception of about $20,000. Later, she said, she discovered that a partner of DeGroot, Barton Switzer of California, had been added as her beneficiary on some mutual fund investments instead of her children.

Switzer is also accused by the state securities division of violating state laws.

Another investor, Jack Henkle of Arlington, said he, too, was referred by his credit union when he took a lump sum after retiring early from GTE.

DeGroot, he said, appeared to be a good investor and for the most part put his money in regular mutual funds. But he did take $20,000 and invested it in a program to build storage buildings in California, Henkle said.

Henkle said he needed money from his investments to live on and that DeGroot started making scheduled payments later and later.

"I told him this was a big problem and he had lots and lots of excuses," Henkle said.

He said DeGroot ultimately didn’t respond to phone calls regularly, so he went to another financial institution and had them transfer his accounts. The transfer took some nine months because DeGroot wasn’t helpful.

Ultimately, there was no money left in the storage building investment.

"I’m so glad he didn’t say let’s do $40,000 in that investment because we were so gullible then," Henkle said.

DeGroot, who has been selling securities in Washington since 1981, is a broker dealer for Emmett A. Larkin Co., which was not mentioned by state securities officials.

He previously was a broker-dealer for Equity Programs Corp. of California, which is listed as a defendant.

Business editor Mike Benbow: 425-339-3459 or

benbow@heraldnet.com.