Easley lawyer accused of ethical violations that targeted veterans and bilked investors – Greenville News

Easley lawyer Candy Kern-Fullercommitted egregious ethical violationsas the "central banker" of ascheme involving the illegal sale of military benefits, according to an attorney for the state of Arizona and a retired law professor at the University of South Carolina.

NEW: Easley attorney agrees to end 'civil conspiracy' of buying and selling veterans' benefits

The 51-year-old founder of Upstate Law Group and her cohorts profited by defrauding financially distressed veterans and unwitting investorsacross the country, her accusers say.

As part of a continuing investigation, The Greenville News and Anderson Independent Mail obtained and revieweda1,139-page transcript that was filed last week from an August hearing in Phoenix. Kern-Fuller invoked her Fifth Amendment right to remain silent 164 times during the hearing before the Arizona Corporation Commission.

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"Facts show that she participated in illegal activity that was so egregious it could lead a reasonable person to conclude she operated or managed a criminal enterprise," retired professor John Freeman stated in a report submitted to the commission.

The Greenville Newscalled Kern-Fuller twice on Thursday and sent an email seeking comment. She did not respond.

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Freeman, who taughtcorporate law, securities lawand legal ethics for more than 30 years, testified as an expert witness during the six-day hearing.

The Arizona Corporation Commissionoversees corporations, securities and utilities in Arizona. The proceedings wererelated to enforcement actionsthat the commission is considering against Kern-Fuller, her firm,three other individuals and two companies that allegedly sold $371,191 in military benefits to Arizona investors in 2017.

The commission seeks a cease-and-desist orderandunspecified restitution.

According to investigators, the arrangements matched veterans seeking lump-sum payments with investors seeking safe returns.Kern-Fuller, whom Freeman described as the "central banker,"and others coordinating the transactions collected fees and commissions. It's not clear how much they earned.

Candy Kern-Fuller.(Photo: File photo)

Freeman said at the hearing that Kern-Fuller didn't acknowledgeconflicts of interest stemming from her involvement withinvestors and veterans. He also said that she provided investors with inadequate risk disclosures thathe described as "gibberish" and a "travesty."

Jamie Burgess, a staff attorney for the commission's securities division, saidKern-Fuller failed to let investors know that thecompanies involved in thetransactions had been barred from doing businessin eight states. She also neglected to mention that it is illegal to buy and sell veterans' disability benefits and pensions, he said.

"The investment documents failed to disclose this is the elephant in the room that federal law prohibits these transactions," Burgess said.

And the paperwork provided to investors was "highly deceptive, misleadingand fraudulent," Burgess said.

Kern-Fuller's attorneyRobert Zelmssaid at the hearing, "This is not a legal malpractice case; this isnot an ethics case... Upstate Law Group, Candy Kern-Fuller did not create these products and transactions that are in question; they did not promote them; they did not market them; they did not sell them. They were involved in the preparation of the closing documents."

An expert witness for Kern-Fuller, William Higgins an attorney whoserveson professional-responsibility and ethics-advisory committees for the South Carolina Bar said, "I fear that Professor Freeman and his report was frankly designed to just make Ms. Kern-Fuller and Upstate Law Group look bad."

A ruling in the case is expected to come next year.

Burgess said Kern-Fuller and her law firm are part of a larger enterprise that includes Arkansas businessman Andrew Gamber and at least two other companies.

In April, the Arizona Corporation Commission issued a cease-and-desist orderthat requires Gamber, 39, BAIC Inc. and SoBell Corp. to repay nearly $2.7 million from 53 transactions involving military benefits completed from 2013 to 2015 in the state.

Dozens of the transactions fell apart when veterans stopped making monthly payments from their military pensionsas arranged.

The involvement of veterans was part of what attracted many investors in the first place, records show.

In her testimony, investor Carolyn Blythe Strong said her father was in the U.S. Coast Guard and served during World War II.

"And so, for me, I have a really soft spot in my heart for veterans... and helping them, particularly with their retirement, was a plus to me," she said.

Other investors who lost money included a retired nurse who was forced to take a minimum-wagejob and a retired Arizona state judge.

"Instead of modest, steady, safe retirement income, the investors got wreckage," Burgess said. "They have lost large portions of their life savings."

- Gabe Cavallaro, Mike Ellis,Ariel Gilreath,Conor Hughes,Nikie Mayo, Anna Mitchell and Haley Walters contributed to this report.

Coming soon:A 12-month investigation by The Greenville News details through court documents and exclusive interviews how investment brokers specifically targeted often-vulnerable veterans by offering cash in exchange for military benefits, often leaving both the veterans and investors in worse financial straits.

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Easley lawyer accused of ethical violations that targeted veterans and bilked investors - Greenville News