Legal Newsline

Wednesday, February 26, 2020

Tenth Circuit to hear former advisers' case against Utah

By John O'Brien | Mar 24, 2011


DENVER (Legal Newsline) - Two former financial advisers who are accusing the state of Utah of ruining their professional lives with a witch hunt are pursuing their appeal of a federal judge's decision against them.

Henry Brock and Jay Rice accused the State of an unconstitutional investigation into their business practices, but U.S. District Judge Tena Campbell disagreed with their accusations in granting Utah Attorney General Mark Shurtleff's motion to dismiss in July.

Now, the U.S. Court of Appeals for the Tenth Circuit is scheduled to hear arguments on their appeal in May.

"Division of Securities' pattern of examinations of complaints and inspection of premises, methods of obtaining information, and actions against Brock and Rice, without a warrant were illegal, unreasonable and unconstitutional, using equipment that was not in public use, were violations of 4th and 14th amendment rights," says Brock's and Rice's reply brief, filed in January.

"The DOS examiner boastfully informed Brock that 'if you're forced into bankruptcy, that's your problem.'"

Their complaint was filed in December 2009 and sought $358 million in damages. As a result of the investigations into their work, Brock and Rice both lost their brokerage licenses.

Brock's website says he was selected as one of America's top financial planners in the Fall 1987 edition of Money Magazine. His lawsuit says the Division of Securities piled on several allegations in 2002 to keep him from being able to defend himself.

In 2006, he settled because he was out of money to pay attorneys fees, he said. He is now being represented by JoAnn Secrist, a former Utah assistant attorney general.

However, Campbell dismissed the lawsuit because, she says, most of the allegations were not made within the four-year statute of limitations, the plaintiffs did not file a notice of claim and the sued state officials did not have an affirmative link to a constitutional violation.

In their appeal, they say "continued wrongdoing" prevents the tolling of the statute of limitations and the Eleventh Amendment allows lawsuits against state officials.

The Securities Division made numerous allegations against Brock, such as guaranteeing customers against loss, using scare tactics at seminars for seniors and soliciting securities transactions while not licensed.

Rice says he was not told why his license was revoked, then a lengthy process kept him from being able to afford fighting it.

Among the allegations made in the pair's complaint are:

-The Securities Division posted press releases containing false information about Brock after the settlement, then paid Google to have those releases listed first when his name was searched;

-Rice's boss was pressured to fire him, even though the DOS gave him no explanation why, after an audit in 2000; and

-The search of Brock's papers and computer wrongfully included seizure of data more than five years old.

"After the downloading was already occurring, the examiner put a piece of paper in front of Brock and said 'either sign this or we'll shut you down right now," Brock's lawsuit claims.

"Brock was never allowed to read the two-page document, single spaced, nor was he given a copy of the document, nor could his attorney obtain a copy from DOS years later when Brock was defending himself. Employees who witnessed the unconstitutional search and seizure are shocked to this day."

Brock's and Rice's reply brief also contains excerpts from a conversation Brock says he had with Keith Woodwell, the director of the DOS in 2008.

Brock refers to his case as "cooked," to which Woodwell replied, "Well, when you say 'cooked cases,' I do not believe that the facts were just fabricated. Do I believe that we are too aggressive sometimes in the way cases were pursued? Yes I do...

"Were they pushed? Did they make the most of our... but was it the wrong way to be found? Yes, sometimes they did."

From Legal Newsline: Reach John O'Brien by e-mail at

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