Afghan shooting suspect did not pay fraud judgment

NEW YORK/SAN FRANCISCO Thu Mar 22, 2012 2:59am EDT

1 of 4. Staff Sgt. Robert Bales, (R) 1st platoon sergeant, Blackhorse Company, 2nd Battalion, 3rd Infantry Regiment, 3rd Stryker Brigade Combat Team, 2nd Infantry Division, is seen during an exercise at the National Training Center in Fort Irwin, California, in this August 23, 2011 DVIDS handout photo.

Credit: Reuters/Department of Defense/Spc. Ryan Hallock/Handout

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NEW YORK/SAN FRANCISCO (Reuters) - The U.S. soldier accused of killing 16 civilians in Afghanistan left for war without paying a $1.5 million judgment for defrauding an elderly client in a stock scheme, and remains shielded from the obligation as long as he remains in the military, legal experts said.

Before beginning his military career in November, 2001, Robert Bales worked almost five-and-a-half years at a series of largely intertwined brokerages that received repeated regulatory censures, according to regulatory records.

Bales joined the Army 18 months after an Ohio investor filed an arbitration complaint alleging unauthorized trading, breach of contract and other abuses against him, his securities firm and the firm's owner. In 2003, the arbitration panel ordered them to pay the investor $1.2 million, including $637,000 in punitive damages for willful or malicious conduct and $216,500 in attorneys' fees.

Bales never appeared before the panel and did not hire a lawyer to represent him.

Earle Frost, a lawyer for the victim, Gary Liebschner, said his client never received any of the payment ordered by the National Association of Securities Dealers (NASD) panel.

He said Liebschner could have taken Bales to court to enforce the award, but "we couldn't find him."

By that time, Bales had embarked on an Army career that included three tours of duty in Iraq and a fourth in Afghanistan.

Even if Bales's victim had pressed the claim, Bales had protection under laws that shield members of the military from some financial obligations.

Any active-duty member of the military can apply for relief from outstanding financial obligations as long as he or she makes less in the service than before, said John Odom, a retired Air Force colonel and a partner at the law firm of Jones & Odom in Shreveport, Louisiana.

Bales, a staff sergeant, is expected to be charged this week in the March 11 killings of nine children and seven other civilians, who were gunned down in a late-night rampage.

His financial troubles add to the complex portrait of the man accused of the massacre.

His lawyer, John Henry Browne, did not respond to a request for comment on the NASD arbitration ruling. He has said Bales joined the army to defend the United States after the September 11, 2001 attacks.

His service in Afghanistan was complicated by mounting financial pressures back home, his lawyer has acknowledged. His home in Washington state had been listed for sale shortly before the alleged massacre.

Bales began his financial industry career in 1996 at Hamilton-Shea Group, a brokerage in Florida that was expelled from NASD in 2001 and fined $1.4 million over several issues, according to records from NASD and its successor organization, the Financial Industry Regulatory Authority (FINRA).

Hamilton-Shea was "the kind of place where you learn to cold call, to 'pump and dump,'" said Joseph Dehner, a lawyer in Cincinnati, Ohio, who specializes in cases involving rogue brokers and firms.

Pump and dump refers to a practice in which firms artificially raise the prices of stocks they hold by aggressively selling shares to clients and then selling their own shares.

At least three Hamilton-Shea brokers who worked briefly with Bales pleaded guilty to violations of securities law after he left Florida to work in Ohio at Quantum Capital Corp., according to records from FINRA. Quantum also owned Hamilton-Shea.

Bales left Quantum in early 1998 to join Michael Patterson Inc., or MPI, whose eponymous owner had worked with him at both Hamilton-Shea and Quantum. Bales remained there until late 1999, then worked for two other Ohio brokerages until December 2000.

Patterson, whose firm was shuttered one month after Bales joined the Army, could not be reached for comment.

Neither FINRA nor the Ohio Divison of Securities ever suspended Bales, who simply let his securities license lapse, according to regulators. If an arbitration award is not paid within 30 days, FINRA can suspend a broker and would not allow him or her to join another firm during the suspension.

(Reporting By Nick Carey, Jed Horowitz and Peter Henderson.; Editing by Marilyn W. Thompson, David Brunnstrom and Paul Simao)

(The story was refiled to add missing first name of soldier in paragraph two)

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Comments (20)
CapTintin wrote:
Well well well !!!! We have a “scapegoat” !!! HOORAY !
Dude serving his country screwed up !!! Did not stop big Military to send him abroad for a FOURTH Tour of Duty !!!
It sure matters NOW when ACCOUNTIBILITY comes in !!!
It’s OK ALL YOU MORONS !!! This poor souls mistake would not have changed a thing anyways !!! Afghans are INDO-EUROPEANS such as US !!!
Their blood runs in our veins! In the same fashion we do not want to be subjegated to anyone else’s RULE, they don’t EITHER !!!
They think like WE DO !!! And in the same fashion they drove the British and Russian Empires OUT, they will DRIVE NATO right out of their country and most likely OUT of EXISTENCE !!!
TIME TO LEAVE NOW !!!!!!!!!!! While OUR young men and women serving are still ALIVE !!!!
The Geopolitical Adventures of NATO are NOT for Afghanistan !!!
FORGET Permanent bases there … Will NEVER happen !!!
Keep going the way you are and you will become a MEMORY like Elphinstone’s Army that got DESTROYED a century and a half ago !!!
USA and NATO will become synonymous with British Empire and USSR DOWNFALL !!!
Please SAVE our young Men and Women and get them the Hell outta there !!!!!!!!!!!!! NOW !!!!!!!!!

Mar 21, 2012 11:06pm EDT  --  Report as abuse
Lord_Foxdrake wrote:
He was never served. He was in the military. He is shielded from the judgment as active duty and making less than he did before.

This has nothing to do with alleged murder charges and is highly prejudicial tainting the potential juror pool.

Did he have unpaid child support too?

Mar 21, 2012 11:48pm EDT  --  Report as abuse
123456951 wrote:
How disgusting. So I can be a white collar criminal, join the military and be exonerated. How disgusting. No one seems to have the guts to do what is necessary here. Turn him over to the Afgan government and let them do what they want with him.

Mar 21, 2012 12:31am EDT  --  Report as abuse
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