An Everett investment adviser accused of misrepresentations that cost people more than $1 million of their retirement funds has agreed to pay a $10,000 fine and give up his securities license for a year.
The fine and license suspension for Robert J. DeGroot Jr. was part of a consent order with the Department of Financial Institutions Securities Division. DeGroot neither admitted nor denied the accusations in agreeing to the order, which requires him to:
* Stop violating the anti-fraud and securities registration sections of the state Securities Act.
* Accept a one-year suspension of his securities sales license that began March 30. Any broker DeGroot affiliates himself with must agree in writing to provide “heightened supervision” for DeGroot for no less than one year.
* Agree to a $50,000 fine, of which $40,000 will be suspended based on his compliance with the consent order. He agreed to pay $833.37 a month to pay off the remaining $10,000.
Efforts to reach DeGroot for comment were unsuccessful.
State officials said a number of people, many of them former employees of GTE, lost substantial amounts of money on investments recommended by DeGroot.
Barney Spielman, a former Alaska fisherman from Arlington who later moved to Arizona, told The Herald earlier this year that he lost some $270,000.
One investment was supposed to pay 12 percent interest and use the money to build homes in California. State officials said DeGroot was paid a 9 percent commission on the investments and told Spielman and others that they were safe because their investments were secured by real estate.
They weren’t, and the company defaulted on its notes.
Chad Standifer, staff lawyer for the securities division, said the case illustrates how important it is for investors to investigate before handing over their money.
“One of the things they should find out is whether the investment has been registered with either us or the SEC (Securities and Exchange Commission),” Standifer said. “That’s a potential red flag.”
DeGroots securities weren’t registered with the state.
The agency’s Suzanne Sarason said many of DeGroot’s investors were asked to sign or initial various clauses of the agreement, including one that said they could accept losing all of their investment.
“In buying investments, there were a lot of forms people had to sign and initial at various places,” she said. “A lot of people didn’t read those very carefully. lt said it was OK if they lost the whole thing. That wasn’t the way they felt about it.”
She noted that investors must carefully read and make sure they understand any document before signing it.
Standifer said DeGroot is not selling securities and is no longer affiliated with a broker-dealer. If he does affiliate with one, his activities will be closely monitored, Standifer added.
Mike Benbow: 425-339-3459; benbow@heraldnet.com.
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