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Andrew Stoltmann discussed the resignation of SEC Chairman William Donaldson on CNN’s Lou Dobbs Tonight. 

Investment firm pays out $2.65 million to investment fraud victims

Sauk Valley Times, December 6, 2008 (Joseph Bustos)

STERLING – For 10 years, Judith A. Kness of Chadwick invested money with broker Nevin J. Gillette.

Kness invested a small amount, and Gillette promised a large return.

At first, he made good on his promise. Then he made it difficult for Kness to withdraw money from her accounts. “That was the tipoff,” she said.

Gillette, 47, of Sterling, formerly an independent broker with ING, was sentenced last year to 11 years in federal prison for mail and wire fraud. He had taken $7.2 million from more than 50 investors.

Within the last month, ING has paid $2.65 million to 31 of the 37 people who sued the company and Gillette in Whiteside County Circuit Court, according to a news release from Andrew Stoltmann, an attorney for the plaintiffs. They had sought $10.3 million from all parties, court documents show.

Claims against other companies for which Gillette sold investments are still outstanding, Stoltmann said Thursday.

Also named in the suit are First Heartland Capital, Pacific Life Insurance, Western Reserve Life Assurance, Lincoln Benefit, Proequities Inc. and Protective Life and Annuity Insurance.

ING was responsible for Gillette’s actions only from July 2003, when he started working for Locust Street Securities, which ING bought, until he was fired in September 2006, ING spokesman Phil Margolis said.

The investment company oversaw Gillette’s financial dealings and cleared his trades.

“We cooperated fully with the state Securities Department … and we wanted to see this matter resolved,” Margolis said. No further details of the settlement, including who was paid and how much, were made public in the release.

As part of his federal sentence, Gillette must pay 10 percent of his net earnings in restitution.

Stoltmann said he doubts that Gillette actually will pay.

“We had to go against the people supervising him,” Stoltmann said. “Clearly the defendants failed in watching and supervising him.”

Stoltmann would not disclose the names of the six people who did not accept ING’s offer. he did say they did not think the settlement was big enough.

“We’re going to get all of this money back for all of these people,” Stoltmann said.

Kness, who declined to disclose the amount of her settlement, is happy her dealings with ING are over. “I could plan a Christmas this year,” she said.

The ordeal has taught Kness what to look out for when it comes to dealing with investment brokers.

“When they make it hard or difficult to recoup money from them, then you have to be aware something is not right,” she said.

Her dealings with Gillette in particular have left a bad taste.

“Why did he hurt so many people when it wasn’t necessary?” Kness said. “He could have made a good living without hurting them. I don’t understand why he did this.”