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FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246
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2 STATE OF NEW YORK
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ARBITRATION HEARING
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August 24, 2021
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BEFORE: SAMUAL HESTER
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2 APPEARANCES:
3 STUART FINER, ESQ.
4 WOODRUFF CARROLL, ESQ.
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I N D E X O F P R O C E E D I N G S
6 WITNESSES:
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TERRY DORRITY
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Direct Examination by Mr. Finer 13
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RON DORRITY
10 Direct Examination by Mr. Finer 76
Cross Examination by Mr. Carroll 112,168
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JOHN DUVAL
12 Direct Examination by Mr. Finer 170
Voir Dire Examination by Mr. Carroll 176
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STEPHEN RICHARD WOLF
14 Direct Examination by Mr. Carroll 268
Voir Dire Examination by Mr. Finer 275
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TERRY DORRITY
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Cross Examination by Mr. Carroll 362
Redirect Examination by Mr. Finer 421
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2 THE ARBITRATOR: I thought we were
3 already recording. What -- are you set up?
4 MR. FINER: Yeah. Oh, yeah.
5 THE ARBITRATOR: I just want to repeat
6 these part -- what part what I've said, or what I
7 said. This is an arbitration hearing pursuant to the
8 appointment of me as an Arbitrator by Justice --
9 Supreme Court Justice McCluskey. So this will
10 proceed as a hearing as such, and we will make any
11 changes to the existing rules under the C.P.L.R.
12 and/or Common Law in New York as appropriate. Mr.
13 Finer (phonetic spelling) do you want to start your
14 case?
15 MR. FINER: Yes. May I make a brief
16 opening statement.
17 THE ARBITRATOR: You may.
18 OPENING STATEMENT
19 MR. FINER: So -- and I think this is
20 -- hopefully this is helpful for the Court to show
21 what we're intending to prove. So my client lost a
22 hundred and sixty-eight thousand dollars, and -- as
23 shown on the statement. And he was solicited by his
24 nephew, Terry Dorrity, and he asked -- or there was a
25 discussion about what the risk tolerances were, and
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2 my client will testify that his risk tolerance was
3 conservative. And his nephew, Terry Dorrity put him
4 in significantly high-risk products, and didn't --
5 and never said, by the way, that this product, or
6 this style of investing, you could lose all of it.
7 My client will say he never wanted to lose any money,
8 that this was his retirement money.
9 He worked for Lyons Falls Paper Mill
10 and at the time that this happened he was a part-time
11 school bus driver, had no experience in investments.
12 His pension was handled by Fidelity, a ten-point-
13 four-trillion dollar company that has mutual funds
14 and so forth. And he had no experience with
15 basically commodities. We're going to show that the
16 broker, introducing broker financial advisor, had him
17 sign all these papers. They're going to -- I'm sure
18 they're going to argue that he signed them, knew what
19 he was signing, and therefore it's not a defense.
20 And our argument to that is going to be a final
21 testify. You got the papers, you told him to sign
22 here, sign here, sign here, send them in, no
23 explanation, zero.
24 And interestingly, we're going to
25 introduce a decision and findings by the N.F.A.
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2 National Futures Association that took the broker,
3 Terry Dorrity to task for all of the bad acts that
4 were planted in the complaint. Now that -- the
5 findings show specifically that my client -- what
6 the broker did was he ran his account up to two-
7 hundred and eighty-seven thousand, and then used it
8 all for commissions, so at the end of the day, my
9 client got nothing. I think the only thing he got
10 back was like eighteen-hundred dollars and lost it
11 all.
12 So we'll go through the code -- and as
13 a result of that proceeding, Terry Dorrity, you may
14 say, how could he do that, that's not true. But he
15 agreed to be suspended for eight years, and if he
16 ever wanted to come back, he had to pay a hundred
17 thousand dollar fine. And all those findings -- and
18 he agreed to this by consent.
19 So that's the intent of this case, to
20 show that these investments were totally unsuitable.
21 There was no representation what the high risk were,
22 and my client did not have any understanding of what
23 was going on, and never invested in commodities, or
24 futures, or anything before. Thank you.
25 THE ARBITRATOR: Mr. Carroll?
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2 MR. CARROLL: At the time the -- the
3 money was lost. He had been in the commodities
4 market for almost eight years. He had substantial
5 experience, and the -- the losses were a result of
6 two very unfortunate circumstances that occurred
7 completely out of my client's control. One was a --
8 a unexpected market crash that caught all kinds of
9 people, and the other one was that Alaron customer
10 list was purchased by C.F.D. -- P.F.G. who acquired
11 the -- who -- who then went on to -- to work with the
12 customers, but they -- they turned around -- but, how
13 do you say it, they -- the guy running P.F.G. was one
14 of the -- was one of the most successful commodities
15 frauds in the history of the United States. And he
16 embezzled two hundred thousand dollars from the
17 company. And they eventually caught up with him, and
18 then it -- it collapsed, and he lost a substantial
19 lot of money in that, and in the market crash, that
20 account for virtually every penny that was -- was
21 lost here. He thoroughly understood the risk of
22 these things. It's on every piece of paper he
23 signed. It's on every notice he got. And I believe
24 my client will testify that he -- he had it explained
25 to him repeatedly that that was this. And this is a
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2 program that he wanted to do to make some extra
3 money. And he didn't put all of his money in it, he
4 only put a -- a given percentage.
5 THE ARBITRATOR: Previously you used
6 some initials. Is it P.F.G.?
7 MR. CARROLL: That's Peregrine
8 Financial Group. One of the biggest financial
9 disasters in the history of the country. The guy --
10 well -- well, apparently the head of the company is
11 to do with a guy named --
12 THE ARBITRATOR: I just wanted to make
13 sure I understood what that stood for.
14 MR. CARROLL: Yeah, what was going on
15 with the guy named Wasendorf --.
16 THE ARBITRATOR: Yeah, I don't need to
17 know that right now.
18 MR. CARROLL: Okay.
19 THE ARBITRATOR: I just -- I just -- I
20 wanted to clarify which -- what we were talking about
21 with those initials.
22 MR. CARROLL: Okay. And lastly, Your
23 Honor, they seem to be claiming in their -- in their
24 pleadings that they -- that my client sold their
25 stock in the Alaron Company. He did not. That was
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2 the investment company that you put the money in.
3 They invest it in the commodities, it comes back, and
4 then it's a clearinghouse. And that was the extent
5 of Alaron's involvement, and so it's not possible to
6 defraud a person by selling stock that was never sold
7 and wasn't for sale. So that's all I have at
8 present, Your Honor.
9 THE ARBITRATOR: Thank you. Mr.
10 Finer.
11 MR. FINER: My first witness I call
12 Terry Dorrity.
13 THE ARBITRATOR: Put him anywhere you
14 want to.
15 MR. CARROLL: Yeah, well, we got him -
16 - we got to set up over there in the witness stand,
17 and then we'll finally figure it out.
18 (crosstalk)
19 THE ARBITRATOR: I guess these mics
20 might be live right (laughter)? One of them is. And
21 that noise. Anyway, proceed.
22 MR. FINER: Judge can you swear the
23 witness, please?
24 THE ARBITRATOR: Oh. Mr. Dorrity, do
25 you swear to tell the whole truth, and nothing but
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2 the truth?
3 MR. DORRITY: I do.
4 TERRY DORRITY; Sworn.
5 THE ARBITRATOR: Very well. Proceed.
6 MR. CARROLL: Can you hear Terry?
7 THE WITNESS: Pardon.
8 MR. CARROLL: I was talking to the mic
9 -- to make sure we are all in attendance. Can you
10 hear me Terry?
11 THE WITNESS: Yeah, if you can move it
12 -- if you can put it that way that will be helpful.
13 MR. CARROLL: Okay. Let me get him
14 over here. I better do this anyway.
15 THE ARBITRATOR: Is that the right
16 spot?
17 UNIDENTIFIED SPEAKER: Yes.
18 MR. FINER: Can you turn it on? Can I
19 do that?
20 THE ARBITRATOR: Yeah, I think you
21 have to hold the button down. You can try. I
22 haven't been here in a couple of years, you
23 understand.
24 MR. FINER: You are correct. You have
25 to hold the button down and it swings away.
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2 THE ARBITRATOR: That's a -- and just
3 try to keep it out of your way so you don't brush
4 against it ordinarily.
5 UNIDENTIFIED SPEAKER: Say something,
6 Terry.
7 THE WITNESS: Hello.
8 UNIDENTIFIED SPEAKER: Can you hear
9 him?
10 THE WITNESS: Check.
11 UNIDENTIFIED SPEAKER: Steve, can you
12 hear?
13 MR. STEVE: Terry, good morning.
14 THE WITNESS: Good morning.
15 MR. STEVE: Yeah, I can hear.
16 UNIDENTIFIED SPEAKER: You can hear?.
17 Okay.
18 MR. CARROLL: Modern technology, it's
19 really incredible.
20 MR. FINER: Judge as far as the
21 exhibits -- I'm going to -- I have them all together.
22 THE ARBITRATOR: That's fine.
23 THE WITNESS: Judge, I may need my
24 reading glasses if you don’t mind?
25 THE ARBITRATOR: You need your
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2 glasses?
3 THE WITNESS: Yeah.
4 THE ARBITRATOR: Steve, he needs his
5 glasses. He needs his glasses.
6 MR. CARROLL: His glasses? Hang on.
7 MR. RON DORRITY: What? I'm just
8 looking at the ceiling.
9 THE ARBITRATOR: Your person is
10 standing and looking at the ceiling. I don't know
11 what that means.
12 UNIDENTIFIED SPEAKER: Oh, you want to
13 see the witness?
14 MR. RON DORRITY: That’s good.
15 UNIDENTIFIED SPEAKER: Okay. Hang on.
16 Okay.
17 MR. RON DORRITY: Thank you.
18 THE ARBITRATOR: Counsel I -- we
19 haven't talked about how -- how to mark the exhibits.
20 You may do -- call them whatever you want, or you can
21 just identify them by date and title on the record.
22 I -- I don't care which way we're going.
23 MR. FINER: And what I've done your --
24 Your Honor, is that I've marked that as a cover
25 sheet. It says Exhibit One.
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2 THE ARBITRATOR: Okay.
3 MR FINER: And the next one says
4 Exhibit A.
5 THE ARBITRATOR: But yours will then
6 be in letters.
7 MR. CARROLL: Letters? Okay. I had
8 him on -- I had a number, but I'll letter them.
9 THE ARBITRATOR: Oh, that's fine. Use
10 your number also.
11 MR. CARROLL: Yeah, I did one, two,
12 but it will get confusing. I'll do -- I'll -- I'll
13 change them to letters. Not a problem.
14 THE ARBITRATOR: You can do that as
15 you present them.
16 MR. CARROLL: Yes. And a lot of them
17 are the same -- the same things, Your Honor.
18 THE ARBITRATOR: I understand.
19 MR. CARROLL: The same ones that --
20 THE ARBITRATOR: You can sort it out
21 as we proceed.
22 MR. CARROLL: Okay.
23 MR. FINER: Mr. Dorrity, my name is
24 Stuart Finer. I represent your uncle Ron Dorrity.
25 I'm going to ask you a few questions today.
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2 DIRECT-EXAMINATION
3 BY STUART FINER
4 Q.
Is your Uncle Ron Dorrity -- at
5 the time you were handling money for him -- no,
6 strike that.
7 Are futures speculative -- are
8 futures a speculative investment?
9 A. They can be. Sure.
10 Q. And on what basis did you
11 qualify Uncle Ron as a speculative investment?
12 A. Well, we first got together in
13 2004. I do believe that he was newly retired, had
14 another job. It wasn't until 2000 -- 2008 when I had
15 thought that this stock market might be overvalued,
16 that we sold out of all of his mutual funds and
17 stocks, and risk, and put that into bonds, and then
18 we did put a little bit of money over into Ace
19 Investments which I consider just like derivatives,
20 or stocks, or equities, you know, a form of growth or
21 what equals risk in my opinion. So we sold out of a
22 lot of mutual funds, stocks, and equities, and put
23 some of that money, a very small amount, into Ace
24 Investments, which was supposed to be a -- a growth
25 vehicle.
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2 Q. How much money did --?
3 THE ARBITRATOR: I'm sorry. I -- I
4 didn't quite get that name of that investment.
5 MR. DORRITY: Ace Investments.
6 THE ARBITRATOR: Ace?
7 MR. DORRITY: Yes.
8 THE ARBITRATOR: A-C-E?
9 MR. DORRITY: A-C-E, yes.
10 THE ARBITRATOR: Okay.
11 BY MR. FINER: (Cont'g)
12 A. I believe the initial investment
13 in Ace was seventy-five thousand. Right from the
14 beginning in 2004, we had a couple of small commodity
15 trading advisors, which is what Ace was, Zenith and
16 another one, that we had small amounts, ten, or
17 twenty thousand, just as a diversification.
18 Q. And did Uncle Ron recover any
19 money as a result of your investments?
20 A. I believe from the paperwork.
21 Out of the hundred and sixty-nine thousand, I
22 believe, that was claimed, that was invested total
23 over the years. I believe he got twenty-seven or
24 twenty eight thousand out of that.
25 Q. Do you own -- do you own property
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2 in New York?
3 A. Yes.
4 Q. And where is that?
5 A. Thousand Island Park, New York.
6 Q. And is that now the place where
7 you keep your records?
8 A. I don't really have many records
9 because this has been, you know, seventeen years
10 going on, but, you know, generally my computer would
11 have anything that I need for my advisory business
12 right now.
13 Q. Okay. Your -- You’re A.D.V. says
14 that she keep your records at your house in Thousand
15 Island.
16 A. They may have the copies of any
17 of the A.D.V.'s and stuff, but right now, I only
18 have a couple of clients for the advisory business
19 so.
20 Q. Are you licensed to be a
21 financial advisor in New York State?
22 A. No -- no.
23 Q. Were you ever licensed as a
24 registered investment advisor in New York State?
25 A. No, you know --
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2 Q. Yes, or no is fine.
3 MR. CARROLL: Objection, let him
4 explain it.
5 THE ARBITRATOR: You may do it on
6 cross-examine.
7 MR. CARROLL: Okay.
8 BY MR. FINER: (Cont'g)
9 Q. Are you registered -- you know,
10 do you have other property, other than what’s in New
11 York?
12 A. No.
13 Q. No property in Pennsylvania?
14 A. No.
15 Q. Property in Florida?
16 A. No.
17 Q. Did you at some time?
18 A. Yeah.
19 Q. And at the time you and Uncle Ron
20 started investing together, in what State did you
21 have a property?
22 A. Pennsylvania and New York.
23 Q. And you're registered in
24 Pennsylvania, correct?
25 A. I still am, yes.
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2 Q. But not in New York?
3 A. No.
4 Q. Are you also a Principal of
5 Fidelity Planning Group?
6 A. I was, yes.
7 Q. And was there a complaint filed
8 by the National Futures Association against Fidelity
9 Planning Group, and Terry James Dorrity?
10 MR. CARROLL: Objection.
11 THE ARBITRATOR: What's the objection?
12 MR. CARROLL: The objection is that
13 it's -- doesn't involve this client, and is
14 completely irrelevant.
15 THE ARBITRATOR: It's overruled. You
16 can answer it.
17 A. Yes, there was.
18 BY MR. FINER: (Cont'g.)
19 Q. And before I get to that. In
20 front of you is a letter. Is that to Ron?
21 A. Yes, I see it.
22 Q. And can you tell us what -- so
23 what does that letter say?
24 A. It says Ron, give me a call if
25 you have any questions. If you decide to choose me
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2 as your advisor, I'll go over all the papers with
3 you. Either way, we'll talk soon. Hello to the
4 family.
5 Q. Okay. And then the second
6 letter?
7 A. Thanks for your support. If you
8 know anyone who might be interested in any of my
9 services, please give them -- give them a card. It
10 would be much appreciated.
11 Q. Were you soliciting business from
12 New York in Bethel?
13 A. I'm asking for referrals from
14 anyone that he may know.
15 Q. Okay. I’m handing you a
16 complaint. And who brought that complaint?
17 A. The complaint you just handed me?
18 Q. Yes.
19 Q. I would assume the National
20 Futures Association.
21 A. Is there any question that was
22 brought -- well, strike that.
23 Q. What is the National Futures
24 Association?
25 A. It's one of the regulatory bodies
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2 for the commodities industry.
3 Q. And the Business Conduct
4 Committee brought this complaint?
5 A. That is correct.
6 Q. Okay. And in the beginning, can
7 you tell us what their basis for jurisdiction was?
8 A. An investigative report submitted
9 by the Compliance Department of the N.F.A.
10 Q. Saying you're a commodity trading
11 advisor?
12 A. Correct?
13 Q. And you're the sole Principle of
14 the Fidelity Planning Group?
15 A. That is correct.
16 Q. And it also recites -- I'm
17 referencing the prior matters that were settled in
18 2000. Were you fined in 2000?
19 A. Yes.
20 Q. Did you agree to pay a fine of
21 ten thousand dollars?
22 A. Begrudgingly, yes.
23 Q. But you paid it, correct?
24 A. I did.
25 Q. And then in 2002, did you agree
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2 with three months’ suspension and a nine thousand
3 dollar fine?
4 A. Begrudgingly, but yes.
5 Q. And I'm going to direct your
6 attention to number seven.
7 THE ARBITRATOR: Number seven of what?
8 MR. FINER: It's number seven of the
9 complaint. Paragraph number seven.
10 BY MR. FINER: (Cont'g.)
11 Q. There was a determination of you
12 turning over accounts to make revenue for you and to
13 the detriment of customers?
14 MR. FINER: Objection.
15 THE ARBITRATOR: What's the objection?
16 MR. FINER: It's irrelevant.
17 THE ARBITRATOR: Overruled.
18 A. That's what number seven says.
19 Yes, there was -- the majority of the trading was
20 done by ACE Investments throughout the course of
21 time, so there was no churning at all by -- by me,
22 there was no trading.
23 BY MR. FINER: (Cont'g.)
24 Q. But also you agreed to a
25 settlement where you were barred, is that correct?
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NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022
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FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 Page 1 1 8-24-2021 - Arbitration Hearing 2 STATE OF NEW YORK 3 4 ARBITRATION HEARING 5 August 24, 2021 6 7 BEFORE: SAMUAL HESTER 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 2 1 8-24-2021 - Arbitration Hearing 2 APPEARANCES: 3 STUART FINER, ESQ. 4 WOODRUFF CARROLL, ESQ. 5 I N D E X O F P R O C E E D I N G S 6 WITNESSES: 7 TERRY DORRITY 8 Direct Examination by Mr. Finer 13 9 RON DORRITY 10 Direct Examination by Mr. Finer 76 Cross Examination by Mr. Carroll 112,168 11 JOHN DUVAL 12 Direct Examination by Mr. Finer 170 Voir Dire Examination by Mr. Carroll 176 13 STEPHEN RICHARD WOLF 14 Direct Examination by Mr. Carroll 268 Voir Dire Examination by Mr. Finer 275 15 TERRY DORRITY 16 Cross Examination by Mr. Carroll 362 Redirect Examination by Mr. Finer 421 17 18 19 20 21 22 23 24 25 ARII@courtsteno.com www.courtsteno.com 2 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 3 1 8-24-2021 - Arbitration Hearing 2 THE ARBITRATOR: I thought we were 3 already recording. What -- are you set up? 4 MR. FINER: Yeah. Oh, yeah. 5 THE ARBITRATOR: I just want to repeat 6 these part -- what part what I've said, or what I 7 said. This is an arbitration hearing pursuant to the 8 appointment of me as an Arbitrator by Justice -- 9 Supreme Court Justice McCluskey. So this will 10 proceed as a hearing as such, and we will make any 11 changes to the existing rules under the C.P.L.R. 12 and/or Common Law in New York as appropriate. Mr. 13 Finer (phonetic spelling) do you want to start your 14 case? 15 MR. FINER: Yes. May I make a brief 16 opening statement. 17 THE ARBITRATOR: You may. 18 OPENING STATEMENT 19 MR. FINER: So -- and I think this is 20 -- hopefully this is helpful for the Court to show 21 what we're intending to prove. So my client lost a 22 hundred and sixty-eight thousand dollars, and -- as 23 shown on the statement. And he was solicited by his 24 nephew, Terry Dorrity, and he asked -- or there was a 25 discussion about what the risk tolerances were, and ARII@courtsteno.com www.courtsteno.com 3 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 4 1 8-24-2021 - Arbitration Hearing 2 my client will testify that his risk tolerance was 3 conservative. And his nephew, Terry Dorrity put him 4 in significantly high-risk products, and didn't -- 5 and never said, by the way, that this product, or 6 this style of investing, you could lose all of it. 7 My client will say he never wanted to lose any money, 8 that this was his retirement money. 9 He worked for Lyons Falls Paper Mill 10 and at the time that this happened he was a part-time 11 school bus driver, had no experience in investments. 12 His pension was handled by Fidelity, a ten-point- 13 four-trillion dollar company that has mutual funds 14 and so forth. And he had no experience with 15 basically commodities. We're going to show that the 16 broker, introducing broker financial advisor, had him 17 sign all these papers. They're going to -- I'm sure 18 they're going to argue that he signed them, knew what 19 he was signing, and therefore it's not a defense. 20 And our argument to that is going to be a final 21 testify. You got the papers, you told him to sign 22 here, sign here, sign here, send them in, no 23 explanation, zero. 24 And interestingly, we're going to 25 introduce a decision and findings by the N.F.A. ARII@courtsteno.com www.courtsteno.com 4 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 5 1 8-24-2021 - Arbitration Hearing 2 National Futures Association that took the broker, 3 Terry Dorrity to task for all of the bad acts that 4 were planted in the complaint. Now that -- the 5 findings show specifically that my client -- what 6 the broker did was he ran his account up to two- 7 hundred and eighty-seven thousand, and then used it 8 all for commissions, so at the end of the day, my 9 client got nothing. I think the only thing he got 10 back was like eighteen-hundred dollars and lost it 11 all. 12 So we'll go through the code -- and as 13 a result of that proceeding, Terry Dorrity, you may 14 say, how could he do that, that's not true. But he 15 agreed to be suspended for eight years, and if he 16 ever wanted to come back, he had to pay a hundred 17 thousand dollar fine. And all those findings -- and 18 he agreed to this by consent. 19 So that's the intent of this case, to 20 show that these investments were totally unsuitable. 21 There was no representation what the high risk were, 22 and my client did not have any understanding of what 23 was going on, and never invested in commodities, or 24 futures, or anything before. Thank you. 25 THE ARBITRATOR: Mr. Carroll? ARII@courtsteno.com www.courtsteno.com 5 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 6 1 8-24-2021 - Arbitration Hearing 2 MR. CARROLL: At the time the -- the 3 money was lost. He had been in the commodities 4 market for almost eight years. He had substantial 5 experience, and the -- the losses were a result of 6 two very unfortunate circumstances that occurred 7 completely out of my client's control. One was a -- 8 a unexpected market crash that caught all kinds of 9 people, and the other one was that Alaron customer 10 list was purchased by C.F.D. -- P.F.G. who acquired 11 the -- who -- who then went on to -- to work with the 12 customers, but they -- they turned around -- but, how 13 do you say it, they -- the guy running P.F.G. was one 14 of the -- was one of the most successful commodities 15 frauds in the history of the United States. And he 16 embezzled two hundred thousand dollars from the 17 company. And they eventually caught up with him, and 18 then it -- it collapsed, and he lost a substantial 19 lot of money in that, and in the market crash, that 20 account for virtually every penny that was -- was 21 lost here. He thoroughly understood the risk of 22 these things. It's on every piece of paper he 23 signed. It's on every notice he got. And I believe 24 my client will testify that he -- he had it explained 25 to him repeatedly that that was this. And this is a ARII@courtsteno.com www.courtsteno.com 6 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 7 1 8-24-2021 - Arbitration Hearing 2 program that he wanted to do to make some extra 3 money. And he didn't put all of his money in it, he 4 only put a -- a given percentage. 5 THE ARBITRATOR: Previously you used 6 some initials. Is it P.F.G.? 7 MR. CARROLL: That's Peregrine 8 Financial Group. One of the biggest financial 9 disasters in the history of the country. The guy -- 10 well -- well, apparently the head of the company is 11 to do with a guy named -- 12 THE ARBITRATOR: I just wanted to make 13 sure I understood what that stood for. 14 MR. CARROLL: Yeah, what was going on 15 with the guy named Wasendorf --. 16 THE ARBITRATOR: Yeah, I don't need to 17 know that right now. 18 MR. CARROLL: Okay. 19 THE ARBITRATOR: I just -- I just -- I 20 wanted to clarify which -- what we were talking about 21 with those initials. 22 MR. CARROLL: Okay. And lastly, Your 23 Honor, they seem to be claiming in their -- in their 24 pleadings that they -- that my client sold their 25 stock in the Alaron Company. He did not. That was ARII@courtsteno.com www.courtsteno.com 7 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 8 1 8-24-2021 - Arbitration Hearing 2 the investment company that you put the money in. 3 They invest it in the commodities, it comes back, and 4 then it's a clearinghouse. And that was the extent 5 of Alaron's involvement, and so it's not possible to 6 defraud a person by selling stock that was never sold 7 and wasn't for sale. So that's all I have at 8 present, Your Honor. 9 THE ARBITRATOR: Thank you. Mr. 10 Finer. 11 MR. FINER: My first witness I call 12 Terry Dorrity. 13 THE ARBITRATOR: Put him anywhere you 14 want to. 15 MR. CARROLL: Yeah, well, we got him - 16 - we got to set up over there in the witness stand, 17 and then we'll finally figure it out. 18 (crosstalk) 19 THE ARBITRATOR: I guess these mics 20 might be live right (laughter)? One of them is. And 21 that noise. Anyway, proceed. 22 MR. FINER: Judge can you swear the 23 witness, please? 24 THE ARBITRATOR: Oh. Mr. Dorrity, do 25 you swear to tell the whole truth, and nothing but ARII@courtsteno.com www.courtsteno.com 8 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 9 1 8-24-2021 - Arbitration Hearing 2 the truth? 3 MR. DORRITY: I do. 4 TERRY DORRITY; Sworn. 5 THE ARBITRATOR: Very well. Proceed. 6 MR. CARROLL: Can you hear Terry? 7 THE WITNESS: Pardon. 8 MR. CARROLL: I was talking to the mic 9 -- to make sure we are all in attendance. Can you 10 hear me Terry? 11 THE WITNESS: Yeah, if you can move it 12 -- if you can put it that way that will be helpful. 13 MR. CARROLL: Okay. Let me get him 14 over here. I better do this anyway. 15 THE ARBITRATOR: Is that the right 16 spot? 17 UNIDENTIFIED SPEAKER: Yes. 18 MR. FINER: Can you turn it on? Can I 19 do that? 20 THE ARBITRATOR: Yeah, I think you 21 have to hold the button down. You can try. I 22 haven't been here in a couple of years, you 23 understand. 24 MR. FINER: You are correct. You have 25 to hold the button down and it swings away. ARII@courtsteno.com www.courtsteno.com 9 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 10 1 8-24-2021 - Arbitration Hearing 2 THE ARBITRATOR: That's a -- and just 3 try to keep it out of your way so you don't brush 4 against it ordinarily. 5 UNIDENTIFIED SPEAKER: Say something, 6 Terry. 7 THE WITNESS: Hello. 8 UNIDENTIFIED SPEAKER: Can you hear 9 him? 10 THE WITNESS: Check. 11 UNIDENTIFIED SPEAKER: Steve, can you 12 hear? 13 MR. STEVE: Terry, good morning. 14 THE WITNESS: Good morning. 15 MR. STEVE: Yeah, I can hear. 16 UNIDENTIFIED SPEAKER: You can hear?. 17 Okay. 18 MR. CARROLL: Modern technology, it's 19 really incredible. 20 MR. FINER: Judge as far as the 21 exhibits -- I'm going to -- I have them all together. 22 THE ARBITRATOR: That's fine. 23 THE WITNESS: Judge, I may need my 24 reading glasses if you don’t mind? 25 THE ARBITRATOR: You need your ARII@courtsteno.com www.courtsteno.com 10 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 11 1 8-24-2021 - Arbitration Hearing 2 glasses? 3 THE WITNESS: Yeah. 4 THE ARBITRATOR: Steve, he needs his 5 glasses. He needs his glasses. 6 MR. CARROLL: His glasses? Hang on. 7 MR. RON DORRITY: What? I'm just 8 looking at the ceiling. 9 THE ARBITRATOR: Your person is 10 standing and looking at the ceiling. I don't know 11 what that means. 12 UNIDENTIFIED SPEAKER: Oh, you want to 13 see the witness? 14 MR. RON DORRITY: That’s good. 15 UNIDENTIFIED SPEAKER: Okay. Hang on. 16 Okay. 17 MR. RON DORRITY: Thank you. 18 THE ARBITRATOR: Counsel I -- we 19 haven't talked about how -- how to mark the exhibits. 20 You may do -- call them whatever you want, or you can 21 just identify them by date and title on the record. 22 I -- I don't care which way we're going. 23 MR. FINER: And what I've done your -- 24 Your Honor, is that I've marked that as a cover 25 sheet. It says Exhibit One. ARII@courtsteno.com www.courtsteno.com 11 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 12 1 8-24-2021 - Arbitration Hearing 2 THE ARBITRATOR: Okay. 3 MR FINER: And the next one says 4 Exhibit A. 5 THE ARBITRATOR: But yours will then 6 be in letters. 7 MR. CARROLL: Letters? Okay. I had 8 him on -- I had a number, but I'll letter them. 9 THE ARBITRATOR: Oh, that's fine. Use 10 your number also. 11 MR. CARROLL: Yeah, I did one, two, 12 but it will get confusing. I'll do -- I'll -- I'll 13 change them to letters. Not a problem. 14 THE ARBITRATOR: You can do that as 15 you present them. 16 MR. CARROLL: Yes. And a lot of them 17 are the same -- the same things, Your Honor. 18 THE ARBITRATOR: I understand. 19 MR. CARROLL: The same ones that -- 20 THE ARBITRATOR: You can sort it out 21 as we proceed. 22 MR. CARROLL: Okay. 23 MR. FINER: Mr. Dorrity, my name is 24 Stuart Finer. I represent your uncle Ron Dorrity. 25 I'm going to ask you a few questions today. ARII@courtsteno.com www.courtsteno.com 12 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 13 1 8-24-2021 - Arbitration Hearing 2 DIRECT-EXAMINATION 3 BY STUART FINER 4 Q. Is your Uncle Ron Dorrity -- at 5 the time you were handling money for him -- no, 6 strike that. 7 Are futures speculative -- are 8 futures a speculative investment? 9 A. They can be. Sure. 10 Q. And on what basis did you 11 qualify Uncle Ron as a speculative investment? 12 A. Well, we first got together in 13 2004. I do believe that he was newly retired, had 14 another job. It wasn't until 2000 -- 2008 when I had 15 thought that this stock market might be overvalued, 16 that we sold out of all of his mutual funds and 17 stocks, and risk, and put that into bonds, and then 18 we did put a little bit of money over into Ace 19 Investments which I consider just like derivatives, 20 or stocks, or equities, you know, a form of growth or 21 what equals risk in my opinion. So we sold out of a 22 lot of mutual funds, stocks, and equities, and put 23 some of that money, a very small amount, into Ace 24 Investments, which was supposed to be a -- a growth 25 vehicle. ARII@courtsteno.com www.courtsteno.com 13 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 14 1 8-24-2021 - Arbitration Hearing 2 Q. How much money did --? 3 THE ARBITRATOR: I'm sorry. I -- I 4 didn't quite get that name of that investment. 5 MR. DORRITY: Ace Investments. 6 THE ARBITRATOR: Ace? 7 MR. DORRITY: Yes. 8 THE ARBITRATOR: A-C-E? 9 MR. DORRITY: A-C-E, yes. 10 THE ARBITRATOR: Okay. 11 BY MR. FINER: (Cont'g) 12 A. I believe the initial investment 13 in Ace was seventy-five thousand. Right from the 14 beginning in 2004, we had a couple of small commodity 15 trading advisors, which is what Ace was, Zenith and 16 another one, that we had small amounts, ten, or 17 twenty thousand, just as a diversification. 18 Q. And did Uncle Ron recover any 19 money as a result of your investments? 20 A. I believe from the paperwork. 21 Out of the hundred and sixty-nine thousand, I 22 believe, that was claimed, that was invested total 23 over the years. I believe he got twenty-seven or 24 twenty eight thousand out of that. 25 Q. Do you own -- do you own property ARII@courtsteno.com www.courtsteno.com 14 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 15 1 8-24-2021 - Arbitration Hearing 2 in New York? 3 A. Yes. 4 Q. And where is that? 5 A. Thousand Island Park, New York. 6 Q. And is that now the place where 7 you keep your records? 8 A. I don't really have many records 9 because this has been, you know, seventeen years 10 going on, but, you know, generally my computer would 11 have anything that I need for my advisory business 12 right now. 13 Q. Okay. Your -- You’re A.D.V. says 14 that she keep your records at your house in Thousand 15 Island. 16 A. They may have the copies of any 17 of the A.D.V.'s and stuff, but right now, I only 18 have a couple of clients for the advisory business 19 so. 20 Q. Are you licensed to be a 21 financial advisor in New York State? 22 A. No -- no. 23 Q. Were you ever licensed as a 24 registered investment advisor in New York State? 25 A. No, you know -- ARII@courtsteno.com www.courtsteno.com 15 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 16 1 8-24-2021 - Arbitration Hearing 2 Q. Yes, or no is fine. 3 MR. CARROLL: Objection, let him 4 explain it. 5 THE ARBITRATOR: You may do it on 6 cross-examine. 7 MR. CARROLL: Okay. 8 BY MR. FINER: (Cont'g) 9 Q. Are you registered -- you know, 10 do you have other property, other than what’s in New 11 York? 12 A. No. 13 Q. No property in Pennsylvania? 14 A. No. 15 Q. Property in Florida? 16 A. No. 17 Q. Did you at some time? 18 A. Yeah. 19 Q. And at the time you and Uncle Ron 20 started investing together, in what State did you 21 have a property? 22 A. Pennsylvania and New York. 23 Q. And you're registered in 24 Pennsylvania, correct? 25 A. I still am, yes. ARII@courtsteno.com www.courtsteno.com 16 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 17 1 8-24-2021 - Arbitration Hearing 2 Q. But not in New York? 3 A. No. 4 Q. Are you also a Principal of 5 Fidelity Planning Group? 6 A. I was, yes. 7 Q. And was there a complaint filed 8 by the National Futures Association against Fidelity 9 Planning Group, and Terry James Dorrity? 10 MR. CARROLL: Objection. 11 THE ARBITRATOR: What's the objection? 12 MR. CARROLL: The objection is that 13 it's -- doesn't involve this client, and is 14 completely irrelevant. 15 THE ARBITRATOR: It's overruled. You 16 can answer it. 17 A. Yes, there was. 18 BY MR. FINER: (Cont'g.) 19 Q. And before I get to that. In 20 front of you is a letter. Is that to Ron? 21 A. Yes, I see it. 22 Q. And can you tell us what -- so 23 what does that letter say? 24 A. It says Ron, give me a call if 25 you have any questions. If you decide to choose me ARII@courtsteno.com www.courtsteno.com 17 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 18 1 8-24-2021 - Arbitration Hearing 2 as your advisor, I'll go over all the papers with 3 you. Either way, we'll talk soon. Hello to the 4 family. 5 Q. Okay. And then the second 6 letter? 7 A. Thanks for your support. If you 8 know anyone who might be interested in any of my 9 services, please give them -- give them a card. It 10 would be much appreciated. 11 Q. Were you soliciting business from 12 New York in Bethel? 13 A. I'm asking for referrals from 14 anyone that he may know. 15 Q. Okay. I’m handing you a 16 complaint. And who brought that complaint? 17 A. The complaint you just handed me? 18 Q. Yes. 19 Q. I would assume the National 20 Futures Association. 21 A. Is there any question that was 22 brought -- well, strike that. 23 Q. What is the National Futures 24 Association? 25 A. It's one of the regulatory bodies ARII@courtsteno.com www.courtsteno.com 18 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 19 1 8-24-2021 - Arbitration Hearing 2 for the commodities industry. 3 Q. And the Business Conduct 4 Committee brought this complaint? 5 A. That is correct. 6 Q. Okay. And in the beginning, can 7 you tell us what their basis for jurisdiction was? 8 A. An investigative report submitted 9 by the Compliance Department of the N.F.A. 10 Q. Saying you're a commodity trading 11 advisor? 12 A. Correct? 13 Q. And you're the sole Principle of 14 the Fidelity Planning Group? 15 A. That is correct. 16 Q. And it also recites -- I'm 17 referencing the prior matters that were settled in 18 2000. Were you fined in 2000? 19 A. Yes. 20 Q. Did you agree to pay a fine of 21 ten thousand dollars? 22 A. Begrudgingly, yes. 23 Q. But you paid it, correct? 24 A. I did. 25 Q. And then in 2002, did you agree ARII@courtsteno.com www.courtsteno.com 19 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022 800.523.7887 8-24-2021, Arbitration Hearing Associated Reporters Int'l., Inc. Page 20 1 8-24-2021 - Arbitration Hearing 2 with three months’ suspension and a nine thousand 3 dollar fine? 4 A. Begrudgingly, but yes. 5 Q. And I'm going to direct your 6 attention to number seven. 7 THE ARBITRATOR: Number seven of what? 8 MR. FINER: It's number seven of the 9 complaint. Paragraph number seven. 10 BY MR. FINER: (Cont'g.) 11 Q. There was a determination of you 12 turning over accounts to make revenue for you and to 13 the detriment of customers? 14 MR. FINER: Objection. 15 THE ARBITRATOR: What's the objection? 16 MR. FINER: It's irrelevant. 17 THE ARBITRATOR: Overruled. 18 A. That's what number seven says. 19 Yes, there was -- the majority of the trading was 20 done by ACE Investments throughout the course of 21 time, so there was no churning at all by -- by me, 22 there was no trading. 23 BY MR. FINER: (Cont'g.) 24 Q. But also you agreed to a 25 settlement where you were barred, is that correct? ARII@courtsteno.com www.courtsteno.com 20 of 535 FILED: LEWIS COUNTY CLERK 01/13/2022 02:09 PM INDEX NO. EFCA2017-000246 NYSCEF DOC. NO. 48 RECEIVED NYSCEF: 01/13/2022