"Personally, I believe Dr. Melgen to be blessed by God. He has discovered how to help many people with vision problems to lead a normal life, and that's priceless. Aside from his greatness as a doctor, he is a humble man and has a charitable heart; in short, a benefactor of mankind, whose mission in life is to restore the light in the eyes of so many. All patients, without exceptions, receive his warmth and special care, which is why they end up becoming his friends for life." ~ Read the full testimony from international superstar, Jose Jose here.
ABOUT DR. MELGEN
Dr. Salomon Melgen arrived in the US from the Dominican Republic over 30 years ago with the dream of becoming one of the world’s leading ophthalmologists. Although he did not speak English, he believed in the American Dream and that through hard work, talent and perseverance, he could achieve anything. And he did.
Today, Dr. Melgen is a world-renowned ophthalmologist and national Latino Leader with 25-years of experience in his field. Through his practice “The Melgen Retina Eye Center,” which he founded in 1987, Dr. Melgen provides state-of-the-art Vitreo-Retinal care using the latest and most innovative medical, surgical and laser technologies available. When the Center first opened its doors, it became affiliated with Harvard Medical School’s Schepens Eye Research Institute, the largest eye research center in the world.
He trained at both Yale and Harvard Medical Schools and became a Board Certified Ophthalmologist, specializing in diseases and surgery of the vitreous and retina. Over twenty years ago, when there were no options for patients suffering from macular degeneration, Dr. Salomon Melgen was determined to aggressively treat patients with this disease. He was a pioneer in using laser to treat macular degeneration with great success. A few years later larger studies demonstrated that lasers worked. What he was doing became the standard of care. He brought modern retinal surgery to the Treasure Coast helping hundreds of thousands of patients to enjoy a better quality of life. He is a former Director of the American Board of Eye Surgery, a Founding Member of Harvard Medical School’s Schepens’ International Society, a Fellow of the American Academy of Ophthalmology, a member of the American Society of Retinal Specialists, a founding donor of the American Retinal Foundation and a Diplomate of the American Board of Ophthalmology.
His belief is that having perfect vision enables one to capture all of life’s beauty in detail. He places the patient’s interest at the core of his practice, which is why patients consider Dr. Melgen an extremely compassionate physician. For the past three consecutive years Dr. Melgen has been the recipient of the Patients’ Choice Award, awarded to less than 6% of the nation’s 720,000 active physicians, for consistently receiving the highest rankings directly from his patients. This award is granted upon consideration of more than 40,000 patients across the U.S. that provide feedback online about their experiences with their doctors. Hundreds of testimonials and success stories also ratify this award. Dr. Melgen was also the chairperson of the physician advisory board for the State of Florida. Also, he is a recipient of the Castle Connolly Top Doctor Award and recipient of the Compassionate Doctor Award, awarded to less then 3% of the nations 720,000 active physicians in the United States.
Dr. Melgen’s philanthropy extends beyond his medical practice. He is a patron of the arts, having been a founding member and former board member of the Kravis Center for the Performing Arts and also served on the Board of the Palm Beach Council of the Arts. He was also the former chairman of the Hispanic Cultural Arts Society and a former Board Member for the Florida International Volunteers Corps (FAVACA).
Dr. Melgen has been recognized by various organizations throughout his career for his altruism, philanthropy and service to his community. He was also the youngest recipient of Orden al Mérito de Duarte, Sánchez y Mella, the Dominican Republic’s highest honor, bestowed on Dr. Melgen for his contributions to society and was recognized by the Florida Society of Ophthalmology, receiving the James W. Clower Award for his community service. Dr. Melgen is a former Dominican Republic Ambassador to the United Nations and now serves as an Honorary Ambassador-at large of the Dominican Republic.
Last December, Dr. Melgen was honored by the prestigious Dominican-American Roundtable for his contributions to society and science at the U.S. Capitol. He was introduced by U.S. Senator Robert Menendez (D-NJ) who in his remarks highlighted Dr. Melgen and his career as an inspiration and a clear example of the American Dream. He emphasized that he was most struck by Dr. Melgen’s perseverance and passion in pursuing his goals and added that he had personally witnessed Dr. Melgen’s daily actions of charity and altruism noting how humbly he has always gone about it, never bringing attention to his efforts.
On the day Dr. Melgen became a citizen of the United States of America, U.S. Senator Bob Graham (D-FL) presented him with the flag that had flown on the U.S. Capitol that day along with a letter thanking him for his contributions to our country.
"Dr. Melgen is a man of impeccable character. Throughout all of my dealings with him I have never questioned his commitment to doing what is right. Furthermore, he is a man that is dedicated to helping the community and furthering the interests of all involved with transparency, efficiency and above all trust and absolute integrity." - Retired United States Army Lieutenant General Ricardo Sanchez, former Commander of Coalition Ground Forces in Iraq (June 2003 to June 2004)
"I consider Dr. Melgen to be a very good friend and a person of high integrity. His efforts as a co-founder and board member of Seisint, Inc. are to be greatly valued. He played a major role in Seisint's development, the data base company which helped the United States Government track down the terrorists responsible for the 9/11 attacks. I consider him a great American and a man who loves and will do anything for this country." – Brian Stafford, Former Director of the United States Secret Service (1999-2003)
Beginning in late August of 2004 a series of events began that would severely test Dr. Melgen's faith in the American Dream.
Over the next 6 weeks, Dr. Melgen lost $15,000,000 due to a forged document and the sheer negligence of one of American's biggest banks (Bank of America).
Dr. Melgen was a co-founder, board member and angel investor in Seisint, the company that played a vital role in the early identification of the perpetrators of the 9/11 attacks. In 2004, Seisint was sold to Reed Elsevier for $775 million, providing Dr. Melgen with $15 million for his investment in the company.
Jerome Fisher knew Dr. Melgen would be receiving a significant sum of money from the Seisint sale. Dr. Melgen considered Mr. Fisher, who founded the Nine West shoe store chain, to be a good friend. Mr. Fisher told him about some spectacular returns he was earning on investments in an individual account at Banc of America Securities managed by a local Palm Beach money manager, John Kim. Fisher encouraged Dr. Melgen to open an individual investment account at Banc of America also to be managed by John Kim, which Dr. Melgen did. Kim was reputed to be a capable trader. Melgen deposited almost all of his share of the Seisint sale in Banc of America Securities and granted Kim, and only Kim individually, a limited power of attorney that only permitted him to trade, but not withdraw any money from the account.
According to documents filed by Melgen’s lawyers, what he didn’t know at the time he opened the account was that Fisher actually had a pending $5.7 million margin call. According to internal Banc of America Securities emails, bank officials were concerned with how the Fisher margin call would be met.
To Dr. Melgen’s shock, what he found out only after being granted some limited discovery in the Florida State Courts, is that his account was actually being controlled and traded by Won Lee, a partner of Kim’s in a hedge fund. Won Lee was not authorized in the Trading Authorization to act in the account. Yet it was later revealed that he had been in full control of the account from day one. Banc emails show that at one point Lee was being allowed to trade Melgen’s account at a ratio of 5.3 to 1.
According to Won Lee’s affidavit, Fisher was very concerned with the margin calls in his account when he brought Dr. Melgen to Banc of America. Additionally, Lee stated that Lee was trading Fisher’s and Melgen’s accounts in bulk, permitting them to allocate gains to Fisher and losses to Melgen, thus covering Fisher’s losses. According to Lee, “(Banc of America) should not have permitted us to trade the … assets in bulk in (Lee’s) Shoreland Account. The Fisher and Melgen accounts were separate accounts.” The bank knew when the accounts were opened that they were separate accounts. Lee further stated, “it appeared to me that (Banc of America) was willing to give me anything I asked for. In fact, I think that (Banc of America) may have changed the trading platform just for us, to allow us to bulk trade different customer’s accounts”.
By October 12, 2004 the Bank had decided that its “experience with the client does not merit the risks. Therefore after the client has closed the position, we are going to ask the client to take their business elsewhere.” See Email dated Oct 12, 2004. On October 13, 2004 Banc of America Securities did in fact send a letter to Won Lee directing him to “transition your accounts to another custodian as soon as possible.” Curiously, Dr. Melgen was never advised that Banc of America deemed Won Lee too risky to do business with. Banc of America Securities did not inform Dr. Melgen of this significant and important decision effecting his account. On that same day an internal email expressed thanks to the staff for covering without a loss. (see email).
On October 12, Dr. Melgen still had more than $7,000,000 of his original $15 million investment in assets remaining in his account. Soon after the bank ordered Lee to “transition his accounts to another custodian,” Lee prepared a forged letter directing the bank to transfer “all equity and all stock positions in (Melgen’s) account ... to (Lee’s) account.” This forged letter was not on Dr. Melgen’s letterhead, or anyone’s letterhead. It was faxed to Banc of America Securities from Won Lee. Won Lee was the General Partner of Shoreland Trading and controlled the Shoreland Trading account, to which Dr. Melgen’s money was transferred. At that time Banc of America considered Lee too risky to do business with, apparently because of certain improper trades and Lee’s dishonest response when he was caught making those trades. The bank had ordered Lee out of the bank.
Lee’s Shoreland Trading account did not have any of Lee’s assets in it. Banc of America transferred more than $7 million in assets from the doctor’s account to the Lee account based on that forged letter. The bank did not bother to call Dr. Melgen before doing so. Shortly after, on November 4th, Lee faxed a second memo to Matt Jose at Banc of America. This memo was remarkably and suspiciously similar to the memo that supposedly came from Melgen; even the last sentence included in both memos stated: “If you have any questions, please contact me or Won Lee.” Apparently Mr. Jose did not find it odd that Won Lee was referring to himself in the third person, or that Lee’s memo was nearly identical in form to a memo supposedly written by Dr. Melgen (see faxes for yourself). The totality of these facts should have been clear to any broker with any degree of knowledge or experience. Perhaps this is why Lee thanked the bank for facilitating the transfer.
Throughout the entire course of this case, Dr. Melgen and his attorneys repeatedly wrote to the Securities and Exchange Commission (SEC) seeking the agency’s intervention in what was an egregious action by a major financial institution. The SEC provided no help.
In recent years, Dr. Melgen has spent a significant amount of money in his lawsuit against Banc of America Securities, now owners of Merrill Lynch, to denounce this type of gross negligence, irresponsibility, and failure to protect customer bank deposits.
"The end result could not be more daunting. The federal courts ruled in favor of the bank apparently concluding that Banc of America had no obligation at all, neither fiduciary, nor contractual, to its customers," said Melgen. This latest 2010 ruling against Dr. Melgen has established a very dangerous precedent of law such that no investor is safe and effectively bypasses the strict regulatory protection placed by the SEC and FINRA to protect investors assets. As a matter of fact, this precedent was recently cited in the case of Goldman Sachs v. Bayou Group. “QUITE HONESTLY, I DON’T KNOW WHAT ELSE BANK OF AMERICA COULD HAVE DONE IN ORDER FOR COURTS TO FIND THAT THE BANK ACTED IMPROPERLY. It seems to me that based on this ruling, banks have full immunity to do whatever they want and no responsibility to anyone,” he said.
Surprised by the U.S. banks’ lack of accountability for the investments of its clients, physician Salomon Melgen is launching a public information campaign in America and throughout Latin America to warn investors of the potential risks concealed within the American financial system and the dangerous precedent of law that could essentially endanger all investors. The campaign is intended to warn investors about the risks of doing business with U.S. investment banks, especially Bank of America, based on his painful personal experience. Melgen already informed EFE, the Spanish wire service, of his plans to launch a campaign to raise awareness via TOO BIG TO CARE and various social networks.
Given the potential impact of this precedent on the U.S. financial system, Dr. Melgen is taking this case to the U.S. Senate Banking Committee in an effort to urge them to consider convening a special hearing to discuss the effect this could have in further eroding the credibility of U.S. Banking system. Interestingly, a Senate Banking Committee staffer revealed that one of the issues not addressed in the Dodd-Frank legislation is the custodial responsibility brokers should have towards investors. This omission in US law creates a risk to any investor who places his assets in the custody of brokers, and has to be corrected.
"The banks main asset should be the trust of its customers, and loopholes should not be used to work against the best interest of its customers," said Melgen. "This is quite a stark difference from how Banco Santander took responsibility for its role in the nearly $2 billion in losses suffered by its clients in the Madoff scheme. Bank’s should have a moral duty to protect their clients against fraudulent schemes, especially when they know about them,” said Melgen.
Having lost his court battle, Dr. Melgen now wants to take his case directly to the court of public opinion, "warning investors of the risks and weaknesses of the U.S. financial system, pleading with them to read the small print in any contract and to have legal counsel before signing any document with any brokerage house" he added. “I know I won’t recover my money, but I don’t want what happened to me to happen to anybody else.”
"What amazes me is that while the bank does not dispute its negligent actions in this case, they simultaneously claim no responsibility, giving one a feeling of helplessness in knowing that the banks have no legal obligation to protect customers from their reckless conduct. What is really incredible is the level of their hypocrisy, considering that Bank of America emphasized its trustworthiness in its 2009 Annual Report while denying all responsibility to their customers by seeking rulings adverse to customers and hiding behind technicalities and fine print,” concluded Melgen.
- Read the full case here.
- Read the full court files - Motion in Opposition - here
- Read the full court files - Plaintiffs' Memorandum in Opposition to Dismissal - here
- Read the full court files - Plaintiffs' Motion to Strike Anello Declaration - here
- Read the full court files - Receiver's Final Report - here
- Read the full court files - Response to Bank of America's Memo Opposing the Motion - here
- See Forged Letters - here
- Read Won Lee Affidavit here
- Read Summary of Deposition of Matt Jose - Senior Bank of America Executive here
- Read Declaration of Lawrence Duffy here
- Read Dr. Melgen's Affidavit here
- Read Luis Rivera Affidavit here
- Read Letter from Seisint CEO Paul Cameron here