Court tosses fraud complaint against former investment adviser Dick Van Dyke
August 15, 2016 by Tim Landi
An Illinois appeals court has ruled that state regulators overstepped their authority in 2013 when they accused Springfield financial adviser Dick Van Dyke of fraudulently marketing retirement products to older clients.
In a unanimous opinion handed down last week, three justices of the Fourth District Appellate Court in Springfield found that the Illinois Department of Securities had no legal authority over marketing and sale of indexed insurance annuities offered by Dick Van Dyke Financial, a firm unrelated to the local appliance company.
The justices also overturned $330,000 in fines and $23,500 in witness fees sought against Van Dyke, as well as revocation of his investment adviser registration.
“I feel completely vindicated. All along, I’ve maintained my innocence,” Van Dyke said Wednesday. He was not required to pay the fines and fees during the appeal, and he voluntarily surrendered his investment adviser license.
The Securities Department is an arm of the Illinois Secretary of State’s Office. Secretary of state spokesman Dave Druker said there would be no immediate comment.
“We’re evaluating the decision,” said Druker. The appellate court ruling could be appealed to the Illinois Supreme Court.
Van Dyke, who sold his appliance business in 2000, said fighting the allegations cost him his investment business and hundreds of thousands of dollars in legal fees. He said his new local firm, Annuity Guys, also provides financial services and education, but that he personally is not involved in securities or annuities advice or sales.
“They destroyed my financial-planning business and my reputation on a local level,” said Van Dyke, “and forced me into a new business model.”
He reached a settlement out of court in 2015 with the Illinois Department of Insurance and the Illinois Attorney’s General’s Office by paying a $6,000 fine and agreeing to revise his sales practices.A spokesman for the Department of Insurance also said Wednesday there would be no immediate comment on the decision.
The 2015 settlement dropped references to “fraud and deception.” Van Dyke said he refused to settle with the Illinois Securities Department, or to pay the $330,000 in fines and $23,500 in witness fees.
In a 17-page decision, the appellate court justices concluded the indexed insurance annuities sold by Van Dyke were not “securities” as defined by state financial rules, and that regulators failed to prove fraud or misleading sales tactics. The justices pointed out the original allegations were made by a competing financial adviser and that none of 14 Van Dyke clients who testified in the proceedings had filed complaints.
“All of Van Dyke’s clients reviewed and signed application forms, rider forms and contract forms approved by the Department of Insurance,” the justices wrote, “acknowledging they were aware of the various benefits, features, surrender charges (for ending other annuity contracts) and fees associated with the replacement annuities.
“We find the evidence failed to establish Van Dyke violated the (financial regulatory) act in the sale of individual annuities in this case, and more specifically, that he perpetrated a fraud on clients.”
While Van Dyke said he feels vindicated, he said he hopes his case prompts a review of regulatory proceedings he believes are heavily stacked against the accused.
“It appears they can victimize people such as myself and get away with it, with no legal recourse,” said Van Dyke.
— Contact Tim Landis: tim.landis@sj-r.com, 788-1536, twitter.com/timlandisSJR.
