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Teacher's adviser defends himself

Her financial adviser was supposed to invest and increase her life savings. But she says he squandered most of the $178,000. He is on trial for defrauding her.

By JAMAL THALJI
Published July 19, 2006

NEW PORT RICHEY - Edward Caplinger doesn't have a stockbroker's license. He lost it more than a decade ago.

But a 2000 lawsuit says that didn't stop him from enriching himself by squandering most of teacher Karen Renberg's $178,000 investment at the height of the dot-com bubble.

Caplinger doesn't have a law degree, either. That didn't stop him from defending himself in court this week.

"He manages to lose 80 percent of her funds when the market is going straight up," Renberg's attorney, Robert Persante, told jurors and the judge Monday evening. "There are words I could fully use to describe this, but I won't out of respect for your honor and yourselves.

"For lack of a better way of describing it, he preys on the gullible."

Caplinger didn't address the jury Monday, when the 58-year-old teacher's suit for damages against her 62-year-old ex-adviser finally went to trial. He'll get his chance to put on a defense today.

It was back before the dot-com boom - 1997-to-2001 - went bust, Persante told jurors, when Caplinger was introduced to Renberg as a "man who could guide her investments."

He would, but only if Caplinger had complete control. He asked for, and got, power of attorney over her investments. He even did her taxes.

And he did everything wrong, the suit said, as Caplinger "caused massive losses in Renberg's account while generating excessive commissions for himself."

He sold stocks that did well and held onto the ones that didn't, the suit said, so that the account appeared to do well when in reality "the unrealized losses outweighed the unrealized gains."

He "churned" Renberg's stocks, trading them excessively to inflate his commissions, and bought stocks on margin, putting her in debt, Persante said.

Persante said Renberg was a conservative investor who feared losing her money. Not only did she lose it, she had to pay taxes and penalties incurred by her broker - except Caplinger wasn't a broker anymore. The Florida Office of Financial Regulation stripped him of his two securities licenses in the early '90s for misrepresentations, Persante said.

Caplinger was the first witness called Tuesday morning, which he spent dueling with Persante. He didn't lose his licenses, he said, but his registrations. The state wanted him to take some time off, he said.

"Where are you coming up with this concept that the state of Florida wants you to take a break?" Persante said.

The lawyer accused Caplinger of being careful never to disclose that he was unlicensed.

"In fact, it was your pattern and practice to carefully guard against saying anything about yourself, isn't that true?" Persante said.

Then, silence.

"The question is far too general," Caplinger finally said. "I don't think I should answer it."

A juror stifled a laugh.

Persante accused Caplinger of failing to ensure his investment choices were suitable for Renberg's age, income and goals. Investing in the market is risky, Caplinger responded, but he thinks he acted appropriately on her behalf.

"A person like Karen Renberg wouldn't know what she's doing," he said, "so I had to take over."

Renberg testified she understood little about her investments.

If she was so confused, Caplinger asked her, why didn't she just ask him about it?

"I tried," Renberg said. "But you made some statement like 'Don't worry your pretty little head.' "

Times researcher Angie Drobnic Holan contributed to this report.

[Last modified July 18, 2006, 22:37:08]