A Toronto-area mutual-funds firm that advised an elderly widow to sink hundreds of thousands of dollars into high-risk investments is being criticized in a report by Ontario's ombudsman in charge of financial services.
De Thomas Financial has been targeted by Doug Melville, Ontario's Ombudsman for Banking Services and Investments (OBSI), in his campaign to identify investment dealers that were found to have flouted ombudsman recommendations to compensate clients.
Melville was aware of the case of a 78-year-old woman — identified only as "Mrs. R" — who had taken out a $150,000 loan to invest, on the advice of a longtime financial adviser.
"She was dependent on her adviser, and he put her in a bad position," Melville said.
Meville's so-called "name and shame" report states: "OBSI finds that De Thomas Financial is responsible for the significant losses incurred by Mrs. R. as a result of the unsuitable investments and leverage strategy."
$250K in compensation recommended
The ombudsman added that it was De Thomas Financial's responsibility to provide the client with $254,323 in compensation, but that the company chose instead to ignore the recommendation.
The woman's Aurora, Ont.,-based daughter, Nadine Klingelstein, says her mother was a victim of "elderly abuse" and was easily persuaded because she was not accustomed to managing her finances after her husband died.
She recently found a Visa bill for her mother for $7,500 — on top of the $150,000 loan.
Klingelstein said her mother was a homemaker most of her life and didn't take over the finances until recently.
"Only a year after my dad died was he trying to change her way of investing, and my dad would never, ever have borrowed $150,000 on investments," Klingelstein said.
"She broke down in tears. She started to cry…All she could say was: 'I can't believe he did this to me, I trusted him; your dad trusted him.'"
Alleges smear campaign
For his part, Tony De Thomasis, president of the financial company, maintains the ombudsman's report is part of a smear campaign and believes the family's complaint has no merit. He said his insurance company won't cover the cost, and he's not prepared to pay the family back out of pocket.
De Thomasis said his firm did everything by the book.
"All she could say was, 'I can't believe he did this to me, I trusted him; your dad trusted him.'" - Nadine Klingelstein, on her mother's reaction to her financial woes
"It's like you have a big hammer over your head, and you don't know what to do," he said. "You follow all the rules, all the regulations, and now what?"
He did add, however, that the experience has convinced him to change a company policy with regard to dealing with clients who are senior citizens.
"A lot of seniors don't want to get their family involved for privacy reasons, or if they find out how much money they have, their relationship will change," he said. "Now we might have them sign a letter saying they refuse to have family involved."
The ombudsman's campaign of publicizing offending financial institutions began last year.
While the report may be scathing, the ombudsman's office has no authority to force the firm to pay up.
In the mean time, the family said if they don't receive compensation soon, they will consider taking De Thomas Financial to court.