By Susan K. Schmeichel
Published by the Pittsburgh Tribune-Review on December 28, 2001.
Several victims of an investment scam that cost them their life savings have filed a civil suit against three children of the man who pleaded guilty to the crime and also against the brokerage house that employed them.
Vicki Kuftic Horne, attorney for 30 of the 51 victims of Robert Rose, said the civil suit against Richard R. Rose, Rodger T. Rose, Kevin Rose and Advantage Capital Corp., was filed Wednesday in Allegheny County Court.
Richard and Rodger Rose are the sons of Robert Rose. Kevin Rose is Richard’s son.
Horne said Thursday that she intends to have the case against Kevin Rose dismissed for lack of evidence but said she intends to include Barbara Rose, a daughter of Robert Rose, as a defendant.
The civil suit alleges that the members of the Rose family – who worked with their father at Rose Associates, his financial investment firm – knew about the scam. The suit also says Advantage Capital is responsible for the actions of the three younger Roses, all of whom were licensed brokers with that firm.
“It’s a scenario where people are handling your money – whether it’s a broker or brokerage firm – they simply have a greater responsibility,” Horne said. “And the mechanisms exist to make sure they abide by their responsibility. [The Roses and Advantage Capital] clearly ignored and seemed to purposely ignore those responsibilities.”
Horne said she will seek damages in the amount the victims invested, plus interest that would have been accrued on those investments – about $8 million – as well as punitive damages for her clients. The exact amount will be determined at the time of trial, she said.
John Eddy, an attorney who represents Richard, Rodger and Barbara Rose, said the lawsuit is baseless.
“There is no merit to this at all, and we thoroughly intend to defend it,” he said.
Eddy said he had known the lawsuit would be filed but saw the document for the first time yesterday afternoon.
Attorneys for Advantage Capital were not available for comment.
In December 2000, Robert Rose pleaded guilty to 235 criminal counts in connection with the scam, which was run out of his Bethel Park woodworking business. On April 17, Common Pleas Judge Lawrence O’Toole sentence Rose to 15 to 30 years in prison on charges related to the investment scam which authorities said spanned 27 years and deprived more than 50 investors of $5 million and the security they wanted for their retirements.
Rose, 67, who had Parkinson’s disease and prostate cancer, died in the State Correctional Institute at Pittsburgh after having served slightly more than a month of his sentence.
Rose’s scam began in 1974 when he represented himself to prospective investors as an attorney, financial adviser and friend, said investigators. Many victims were 70 to 90 years old, and the others were family members or close friends of investors. Individual losses – including savings from pensions, inheritances and life insurance policies – ranged from $11,000 to $807,000, authorities said.
Rose issued uninsured certificates to the investors through Rose Associates Financial Service. He also owned another business, Rose Associates Woodworking.
Rose declared bankruptcy in September 1999 after the criminal charges were filed against him. He claimed assets of $318,491 and liabilities of $5.67 million. The case was settled late last year after Rose’s seven children agreed to pay $1,000 each to the creditors. Other assets, including more than $20,000 from the sale of his house will go toward legal fees and other expenses.
William McQuillan Sr., one of the defendants in the civil suit, said he is optimistic that he and the other victims may finally be able to recover some of their investments.
“It’s going to be pretty hard for them to wiggle out of this,” said McQuillan, who said he invested more than $118,000 with Rose and like the other investors, received worthless Rose Certificates.