BizWorthy: Investors Say They Were Fooled By Ads Featuring Former Charlotte Financial Adviser
Former Charlotte financial adviser Jim Heafner is facing a new lawsuit. Nine investors who collectively lost hundreds of thousands of dollars through Heafner say they chose him based on his regular appearances on local TV and radio during what appeared to be regular news programming. In reality, those appearances were advertisements Heafner paid for himself.
For more on this and other business news we’re joined now by Tony Mecia of the Charlotte Ledger Business Newsletter for our segment Biz Worthy.
Marshall Terry: Tony, you spoke with the attorney representing these investors who said his clients might not have invested with Heafner had they known that he paid for these appearances.
Tony Mecia: Right. A lot of companies in Charlotte now are paying to show up in local TV or on radio. It's called "sponsored content." And what they do is they get on there, they pay money, and it's actually an advertisement -- but it looks like a news program where they're interviewed by, in many cases, news anchors on the program.
This is a case, you'll recall, Marshall, that's a little bit complicated, in which a bunch of retirees had seen Heafner on TV, called him up, invested money with him that he put into a company in Florida called One Global. Company went bankrupt. The retirees lost their money. They might recover some of it. So in this lawsuit, it says that they all found out about Heafner from his appearances on WBT radio and WBTV segments that were paid ads -- but that looked like news story.
Terry: And I do want to quickly point out that Heafner, for time, was an underwriter of WFAE. Does this lawsuit contend that the TV and radio stations in question are at fault in any way?
Mecia: Well, just to be clear, this is not a lawsuit against these Charlotte media stations. This is against Heafner and the brokerage that he worked with. And it just mentions, it's really a side issue, as to how they found out about it. Now, in speaking with the lawyer, he did say they were under the assumption that Heafner was an invited-on guest, that he was brought in by the stations because of his expertise.
So the question really is, Marshall, given that these investors thought that it was a news segment, are these local stations, are they adequately disclosing that these are paid ads?
Terry: Did they?
Mecia: Well, I'll just stick to the facts and say that some of these segments were four and five minutes long. In some cases, there is no disclosure that it's sponsored content. In other cases, it's in the first seven seconds of the segment, there was a note at the bottom that says "Sponsored by Heafner Financial." It certainly wasn't, I don't think, prominently displayed. And I think that, you know, the question is to a reasonable person -- would a reasonable person know that these were paid ads or would they think that it's editorial content with the full backing of of the host and of these stations that have pretty good reputations?
Terry: On to banking, now. A 100-page complaint against Wells Fargo executives released by federal regulators last week detailed for the first time some behind-the-scenes emails and practices related to the bank's fake accounts scandal. So what was revealed in the complaint?
Mecia: A few different things. I mean, one is, that some of the executives, former CEO John Stumpf, that he agreed to an $18 million settlement with regulators, agreed never to go back into the banking industry. That's one piece of it. It's sort of calling out the executives for their responsibility in these scandals.
But the other piece of it was some really interesting details that came forth about how exactly they were pressuring some of their employees to hit these numbers.
Terry: So how were they doing that?
Mecia: It has a bunch of quotes from emails from some of the supervisors to the frontline employees. Some of them say, "A whole bunch of management gurus say you need 'BHAGs,' 'bold, hairy, audacious goals.'" And they described that as a management technique. They also, in some cases, they did something called "running the gauntlet," it says, wherein local managers were required to run between rows of their peers and announce their area's sales performance. That was sort of a way of shaming the people that didn't get the numbers. They threatened direct reports with termination. Some emails said, "You struggle, you're gone." You know, there was another one in which they warned employees that if they didn't meet the sales goals, they would be, "transferred to a store where someone had been shot and killed." And if they didn't make enough appointments, they'd be, "forced to walk out in the hot sun around the block."
You know, this has been a scandal that's been going on for four years. You've seen more of these details come out about exactly how it went down. And the really interesting thing is that even four years in, the bank is still kind of struggling to put this behind it. They had earnings a couple of weeks ago in which their earnings were way down associated with the legal fees spent on this. They have a new CEO, and so can they can they kind of move forward? And if you're a bank employee in Charlotte, Wells Fargo one of Charlotte's biggest private employers, you probably don't like all this uncertainty. You would like to put this behind you and move forward with your business.
Terry: Finally, the Super Bowl is this Sunday, and Charlotte is actually making an appearance in one of the commercials during the game. It's a Budweiser commercial. And that appearance is being met with some criticism. So what's going on here?
Mecia: Right. So Budweiser cut an ad, a 60-second ad meant to be uplifting. Sort of celebrating the spirit of America coming together. It's a number of clips in a montage. Four seconds of that clip, about halfway through, is a photo of one of the protesters from the 2016 Keith Lamont Scott shootings hugging a police officer in riot gear. Intended to be uplifting. There was some criticism this week by a city council member or some people on social media saying, "OK.They're exploiting these riots and protests in Charlotte to try to sell beer." And that that seemed inappropriate. But, you know, people can judge for themselves when they see the ad.