Francisco Alberto Diaz Jr., a broker from Coral Gables who was fired by UBS in 2009, has had new complaints filed against him alleging misuse of his clients’ funds. Diaz had a history of misusing client funds which included a judgment rendered by FINRA in favor of a former client. The new complaints allege his clients, natives of Venezuela, had approximately $600,000 of their money misappropriated. The type of fraud perpetrated by Diaz is known as an “affinity” scam, as it targets persons of a common ethnicity or religion. According to the clients’ complaints, Diaz targeted his fellow Venezuelans, using fear of local national economic unrest along with the reputation of his employer to lure them into investing.
One such client had $250,000 invested in CDs, which made between 10 and 12 percent in Venezuela, when she met Diaz. This money was going to be used for her children’s education, and she merely wanted to keep the funds safe. Upon executing an agreement with her new broker, Diaz inflated her net worth, claimed she had no children, and requested credit card and check-writing privileges. Diaz proceeded to take unapproved risks with his client’s money which were not in line with the client’s financial goals.
Diaz’ scheme involved making incredibly risky investments with his clients’ money (which, in turn, provided him with large commissions) by making unauthorized margin trades. Diaz also made his clients sign authorizations written in English, despite the fact they could not read the documents, as they trusted him with their money. Claims against Diaz include breach of contract, failure of UBS to supervise and employee negligence, and breach of fiduciary duty.