SUNDAY, MARCH 30, 1997

Elderly sisters lost their savings when a financial planner stepped in.
Broker who squandered nest egg isn't through yet

PALM BEACH POST Massachusetts sisters Daisy Wilson worked for decades in everyday jobs, finally saving enough to retire to Florida about 25 years ago.

But here, far away from relatives, they met 40 year old Marc J. Berman, a charming young broker fond of wearing a canary-yellow double breasted suit, driving a bright red BMW and bringing champagne home for dinner with 77 year old Daisy. Now, six years later, Daisy and Emma's money is gone. Emma has passed away and Daisy is mentally incompetent living in a nursing home. Berman owes them about $500,000.

But the man who started his career working in a furniture store, called the Original House of Dinettes, says he can't afford to pay. Why should he? Berman also is listed as the sole beneficiary of Daisy's will. Back in 1991, a friend of Daisy's family introduced Berman to Daisy and Emma, then 85. Berman was a broker in Fort Lauderdale. He also sold insurance and was a financial planner. The friend suggested him because Daisy's niece, Carol McKay and her husband Ed, were concerned about an investment Daisy made in an annuity.

Or rather, they were queasy about the insurance agent who sold it to her. The man, who met the elderly women by knocking on their Lake Park condominium door one day, brought gifts - a Christmas tree, cakes, nightgowns. The McKays, who were here visiting, asked Berman to look over the investment and tell them what he thought. He showed up with charts and graphs, and pulled out an article showing the insurance company was borderline and probably wouldn't be around in a few years. By the end of the talk, the McKays and Daisy were ready when Berman offered to take care of the annuity. Any they were receptive when he offered to look at the ladies' other investments. Not really able to interfere much more than that - at what point does a niece step in and tell a maiden aunt what to do, the McKays returned home, comfortable that at least they had gotten the two ladies away from a questionable salesman.

Daisy had never married. She always lived with her sister Emma, even when Emma was married. Daisy worked as a secretary until her retirement in the early 40's and had about $185,107 worth of blue-chip stocks kept in a safety deposit box at her bank. Emma was a widow who had made her money owning a nursing home; she had about $111,497 worth of blue-chip stocks in a bank safety deposit box. In August 1991, Berman convinced Daisy and Emma to move their blue-chip stocks to his control. It was to prove costly. during the next 20 months, Berman and his firm charged them a total of $104,514 in commissions, costs and interest on borrowings in their account originally worth only $296,604.

QUESTIONABLE TRADES

The trades - after the first few - were questionable. After the first week, they were downright crazy, said Russell C. Silverglate, the Boca Raton attorney from Dickenson Murdoch, Rex and Sloan who later represented the ladies against Berman. "On August 13, Berman bought Mellon Bank stock. Two days after opening the account, he went for Lectec, a medical device company that sold for around $15. Then he started getting into puts and trading on the Nikkei Index, S&P warrants, then some calls, and then he started buying $5 stocks, and then $1 stocks", Silverglate said. The fast trades enriched Berman through commissions. In August, 1992 alone he made 17 trades. But he made bad guesses on where the market was headed. Lectec, for example, now trades for about $6. An Berman began trading the accounts on margin, an extremely risky way of trading by borrowing from the brokerage firm so that you can buy more stock. Did the ladies ever know? It doesn't seem likely. The McKays, cleaning out the ladies' condo recently, found a champagne cork stuck in the ceiling. Berman admitted bringing champagne home for dinner with Daisy.

Dashing, with his designer glasses and short, well-trimmed beard, Berman also took Daisy shopping, helped her with groceries and bill paying by writing checks for her, according to Silverglate and findings by a National Association of Securities Dealers arbitration panel. The two became such good friends, as Berman put it, that Daisy insisted on giving him gifts. The gifts, checks totaling $41,100, were written by Berman to himself and signed by Diasy, records show. The first one was written on September 30, 1991, little more than a month after they had met. Berman's brokerage firm had rules against brokers accepting gifts from clients. At the NASD hearing, Berman was asked what the fits were for. He said at least one of them was because he was getting married. But he couldn't recall the name of his bride or the wedding date, records show.

On October 23, 1992, Daisy was found unconscious in her home by a neighbor. She was taken to a hospital and diagnosed with organic brain syndrome, paranoid personality and alcohol dependence. Upon her return home, Berman took Daisy to an attorney. She changed her will telling the attorney "Berman was good to her and that her relatives had not been good to her," the NASD documents said. Berman became the sole beneficiary of Daisy's estate. They left the attorney's office and went to Daisy's local bank, the NASD panel found. There, Daisy's savings account was depleted of $73,085 "by persons unknown" the panel said. Silverglate said no one at the bank would agree to testify about who cleaned out the account. Berman, for his part, said in the NASD hearing that all charges should be dismissed because he had done nothing wrong.

Silverglate won the case against Berman, getting a $500,000 award for the two women. The NASD District Conduct Committee barred Berman from selling securities. The NASD arbitration panel was next; it awarded $500,000 to Daisy and Emma. But Berman is still Daisy's sole beneficiary. Daisy's family tried to contest the will. A judge has decided he won't let the family and the broker argue about it until Daisy dies. Daisy's family says they'll wait. Not because there's any large inheritance, but because they don't want Berman to have it. Silverglate, who said Berman is now selling insurance in California, said Berman has not paid a penny of the panel's roughly $500,000 award. The Financial Planners Board of Standards in Colorado said Marc J. Berman, formerly of Deerfield Beach and now living in Solana Beach, California, is in the process of getting his financial planners' license.