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CFP Board Censures Improper CFP® Certificant Conduct

Sep 28, 2009

Washington D.C., September 28, 2009—Certified Financial Planner Board of Standards, Inc. announces public disciplinary actions against the following individuals’ right to use the CFP® certification marks, effective immediately.

STATE NAME LOCATION DISCIPLINE
California Robert E. Barth Laguna Niguel Revocation
Colorado Rick D. VanVleet Fort Collins Revocation
Minnesota Christopher A. Root Edina Suspension
Nevada Richard C. Dergance Las Vegas Revocation
Ohio Kevin K. Kroskey North Royalton Letter of Admonition
Tennessee Edwin H. Jaffe Memphis Suspension

Public disciplinary actions taken by CFP Board, in order of increasing severity, include letter of admonition, suspension, and permanent revocation. A letter of admonition was issued to Kevin K. Kroskey. A suspension for six months was issued to Christopher A. Root, and a suspension for one year was issued to Edwin H. Jaffe. Revocations were issued to Robert Barth, Rick D. VanVleet, and Richard C. Dergance. The basis for each decision can be found in the attached report. Consumers may check on any planner’s disciplinary history and certification status with CFP Board at www.CFP.net/search.

The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for personal financial planning. The Board of Directors, in furthering CFP Board's mission, acts on behalf of the public, CFP® certificants and other stakeholders. CFP Board owns the certification marks CFP®; CERTIFIED FINANCIAL PLANNER™; and the federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. CFP Board currently authorizes more than 60,000 individuals to use these marks in the U.S.

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DISCIPLINARY ACTION REPORT

Letter of Admonition

OHIO

Kevin K. Kroskey (North Royalton): In July 2009, following a hearing by CFP Board’s Disciplinary and Ethics Commission (“Commission”), CFP Board issued Mr. Kroskey a Letter of Admonition. This disciplinary action followed CFP Board’s investigation of two related matters: 1) In October 2002, Mr. Kroskey was convicted of a felony in federal court for Conspiracy to Possess with Intent to Distribute Methylenedioxymethamphetamine (“MDMA”), also commonly known as Ecstasy; and 2) Mr. Kroskey failed to report his conviction to the Ohio Department of Insurance within thirty days from the date of his conviction. In the first matter, Mr. Kroskey served 13 months in prison after being sentenced to 51 months imprisonment followed by three years of supervised probation. After serving one year of probation, Mr. Kroskey was discharged from probation due to his completion of ordered conditions and outstanding compliance. In the second matter, in October 2007, the Ohio Department of Insurance issued Mr. Kroskey a Notice of the Department’s intent to suspend, revoke, or refuse to renew his license as an insurance agent. The grounds for the action were Mr. Kroskey’s felony conviction and his failure to report the felony conviction within thirty days to the Superintendent of Insurance. In January 2008, a hearing was held by the Ohio Department of Insurance, and the Hearing Administrator subsequently issued a Report and Recommendation, which found that Mr. Kroskey had been rehabilitated and will continue to be licensed as an insurance agent in the State of Ohio. The Report also found Mr. Kroskey in violation of Ohio law for not reporting his felony conviction within thirty days of the disposition, and recommended a civil penalty of $500.00 and administrative costs of $250.00. The Commission determined that Mr. Kroskey’s conduct violated Rule 606(a) of CFP Board’s Code of Ethics and Professional Responsibility and provided grounds for discipline pursuant to Articles 3(a) and 3(c) of CFP Board’s Disciplinary Rules and Procedures. In mitigation, the Commission considered the following factors: 1) Mr. Kroskey’s violation of Ohio law for late reporting of his felony conviction was due to his incarceration; 2) the conduct at issue took place when Mr. Kroskey was a college student, long before he began his financial services career, and does not reflect his current level of commitment to his profession and his community; and 3) Mr. Kroskey’s career has suffered and will continue to suffer due to his past conduct. The Commission cited no aggravating factors. Accordingly, the Commission admonished Mr. Kroskey with regard to the above-mentioned conduct.

Suspensions

MINNESOTA

Christopher A. Root (Edina): In July 2009, following a hearing by CFP Board’s Disciplinary and Ethics Commission (“Commission”), CFP Board suspended Mr. Root’s right to use the CFP® certification marks for six months. This discipline followed an investigation of two matters: 1) Mr. Root was the subject of a customer complaint; and 2) Mr. Root identified himself as a CFP® certificant prior to becoming certified. In September 2008, Mr. Root’s application for initial CFP® certification was reviewed by CFP Board. During a routine background check, CFP Board discovered a customer complaint filed against Mr. Root. In correspondence with CFP Board during its investigation, Mr. Root identified himself as a CFP® certificant, even though he had not been certified by CFP Board. The Commission found no violations in relation to the customer complaint. The Commission did find, however, that Mr. Root had identified himself as a CFP® certificant to CFP Board prior to becoming certified and that he failed to use the marks in compliance with the rules and regulations of CFP Board. Thus, the Commission determined that Mr. Root’s conduct violated Rule 601 of CFP Board’s Code of Ethics and Professional Responsibility. The Commission cited no mitigating or aggravating factors. Mr. Root’s suspension is effective from August 10, 2009 to February 10, 2010.

TENNESSEE

Edwin H. Jaffe (Memphis): In July 2009, following a hearing by CFP Board’s Disciplinary and Ethics Commission (“Commission”), CFP Board suspended Mr. Jaffe’s right to use the CFP® certification marks for one year following its investigation of an internal review Mr. Jaffe’s former employer initiated in January 2005 relating to his outside business activities. Mr. Jaffe’s employer found that he violated firm policies by failing to disclose or obtain firm approval for his outside business activities. Mr. Jaffe’s employer permitted him to resign. Mr. Jaffe later entered into a Letter of Acceptance, Waiver and Consent (“AWC”) with NASD, now the Financial Industry Regulatory Authority (“FINRA”). In the AWC, Mr. Jaffe consented to the entry of findings that he participated in private securities transactions without providing his employer prior written notice of the proposed transactions. In the AWC, FINRA determined that Mr. Jaffe violated NASD Conduct Rules 2110 and 3040. Pursuant to the AWC, Mr. Jaffe was fined $20,000 and suspended from association with any NASD member in any capacity for nine months. Mr. Jaffe failed to notify CFP Board of his suspension within ten calendar days of the date on which he was notified of the suspension, as required by Article 12.2 of CFP Board’s Disciplinary Rules and Procedures (“Disciplinary Rules”). The Commission found that Mr. Jaffe’s conduct violated Rules 406, 407(a), 606(a), 606(b) and 607 of CFP Board’s Code of Ethics and Professional Responsibility and provided grounds for discipline pursuant to Articles 3(a) and 3(e) of CFP Board’s Disciplinary Rules. Mr. Jaffe’s suspension is effective from August 10, 2009 to August 10, 2010.

Revocations

CALIFORNIA

Robert E. Barth (Laguna Niguel): In July 2009, following review by CFP Board’s Appeals Committee, CFP Board permanently revoked Mr. Barth’s right to use the CFP® certification marks. The Appeals Committee heard the appeal of a July 2008 decision by CFP Board’s Disciplinary and Ethics Commission (“Commission”) to issue Mr. Barth a permanent revocation. The Commission’s decision followed its investigation of a grievance filed by his former client with CFP Board. After a hearing, the Commission found that Mr. Barth: 1) failed to secure any information about a client's needs and objectives; 2) comingled a client's funds in Mr. Barth’s business account; 3) failed to review and recommend changes to a client's living trust documents; 4) failed to return a client's documents; 5) charged a client inappropriately; 6) failed to disclose compensation arrangements to a client in writing; and 7) failed to act as a fiduciary on behalf of a client. As a result of its findings, the Commission determined that Mr. Barth’s conduct violated Rules 103(d), 103(e), 201, 202, 402(a), 405, 607, 610, 701, 702(a) and 703 of CFP Board’s Code of Ethics and Professional Responsibility and provided grounds for discipline pursuant to Article 3(a) of CFP Board’s Disciplinary Rules and Procedures. Accordingly, the Commission issued a permanent revocation to Mr. Barth. Mr. Barth appealed the findings and discipline imposed by the Commission’s decision, which was affirmed by the Appeals Committee.

COLORADO

Rick D. VanVleet (Fort Collins): In July 2009, following a hearing by CFP Board’s Disciplinary and Ethics Commission (“Commission”), CFP Board permanently revoked Mr. VanVleet’s right to use the CFP® certification marks. This disciplinary action was based on the Commission’s findings that Mr. VanVleet operated a fraudulent investment scheme in violation of the laws of the State of Colorado. In March 2008, Mr. VanVleet was indicted by the Colorado Attorney General’s Office on five counts of securities fraud and two counts of theft over $15,000. The indictment alleged that Mr. VanVleet engaged in an investment fraud scheme where he sold promissory notes to investors and then failed to fulfill the obligations pursuant to the promissory notes. Mr. VanVleet pleaded guilty to one count of securities fraud, and all remaining charges were dropped. Pursuant to the guilty plea, Mr. VanVleet was sentenced to ten years in prison for operating a fraudulent investment scheme. Based on these findings of fact, the Commission determined that Mr. VanVleet’s conduct violated Rules 102, 201, 302, 406, 606(a), 606(b), and 607 of CFP Board’s Code of Ethics and Professional Responsibility and provided grounds for discipline pursuant to Articles 3(a), 3(c) and 3(e) of CFP Board’s Disciplinary Rules and Procedures.

NEVADA

Richard C. Dergance (Las Vegas): In July 2009, following a hearing by CFP Board’s Disciplinary and Ethics Commission (“Commission”), CFP Board permanently revoked Mr. Richard C. Dergance’s right to use the CFP® certification marks. This disciplinary action followed CFP Board’s investigation of a 2007 civil lawsuit and 2008 Financial Industry Regulatory Authority (“FINRA”) regulatory action related to Mr. Dergance’s 2003 sale to clients of $185,300 in investments in a 36-month real estate promissory note. The promissory note was offered by a broker-dealer for whom Mr. Dergance claimed he never worked. According to a Letter of Acceptance, Waiver and Consent (“AWC”) agreement Mr. Dergance entered into with FINRA, he received $18,541 in total commissions related to the sale of the promissory notes. The promissory notes were not registered as securities at the time of the sales, and the clients were not customers of Mr. Dergance’s broker-dealer. Mr. Dergance did not give his broker-dealer prior written notice about the promissory note transactions with the clients. The other broker-dealer defaulted on the promissory notes for all of its investors. According to the AWC, Mr. Dergance was 1) issued a four-month suspension; 2) issued a $5,000 fine; and 3) ordered to disgorge a total of $18,541 in commissions plus interest to his clients. FINRA found that Mr. Dergance violated NASD Conduct Rules 2110 and 3040. Mr. Dergance failed to file a response to the allegations in CFP Board’s Complaint, and after a July 2009 hearing, CFP Board deemed those allegations admitted. Accordingly, pursuant to Article 7.4 of the Disciplinary Rules and Procedures (“Disciplinary Rules”), CFP Board issued Mr. Dergance an Order of Revocation permanently revoking his right to use the CFP® marks. The Commission determined that Mr. Dergance’s conduct violated Rules 201, 302, 401(a) 406, 408 and 606(a) of CFP Board’s Code of Ethics and Professional Responsibility and provided grounds for discipline pursuant to Articles 3(d), 3(e) and 3(f) of the Disciplinary Rules. The Commission identified no mitigating or aggravating factors.

FOR IMMEDIATE RELEASE

CONTACT:
Michael P. Shaw, Managing Director, Professional Review and Legal
Phone: 202 379-2230
Email: mshaw@CFPBoard.org

Speaker's Bureau
CFP Board’s leadership and representatives are available for interviews and speaking engagements on personal finance, the financial planning profession, CFP Board and the CFP® designation.

Did You Know?

Among clients who work with an advisor, 87% of those working with a CFP® professional are satisfied or very satisfied, compared with 72% of those who work with an advisor without certification.
Anyone can call himself a “financial planner.” Only professionals who meet CFP Board’s rigorous standards can call themselves CERTIFIED FINANCIAL PLANNER™ professionals.
The 2013 Household Financial Planning Survey shows that those with a financial plan feel more confident and report more success managing money, savings and investments than those without a plan.
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