ERROLD F. MOODY JR.                                                             

May 19, 2005

Ms. Sarah Ball Teslik


CFP Board of Standards

1670 Broadway, Suite 600

Denver, CO 80202-4809

RE: Beverly P. Smith and Cynthia M. Smith, individually and on behalf of various family trusts v. The Johnson Financial Group, Inc., Asset Management Securities Corp., James Albert Johnson, Jr. and James Michael Johnson (Johnson) NASD Case

Letter to Cynthia Smith, May 9th, Board of Standards

Dear Ms. Teslik,

I once again point you to the breach of duty by the Board. While the initial problem of the (corrupted) exoneration for Johnson was not done on your watch, the subsequent breaches are yours alone. After months and months of repeated requests under formal subpoena, I have yet to receive the material from the Board identifying the review conducted to exonerate the defendant who subsequently, because of my report utilizing less information than what the Board possessed, signed a $300,000 settlement.

I have stated, which I will repeat in any court testimony, that Board attorney Margaret Brock lied to me in an attempt to disperse any obligation by the Board to provide subpoena documents as had been mandated several times. Brock stated that no request for material had been made of Johnson, no material received and no exoneration offered- and I told her the exoneration was in my hand . After long and absolutely unnecessary hours of additional review of the defendant and his attorney because Brock "stated" they were lying, the firm of Ackerman, Link and Satory- through my demands- finally got the Board to send some subpoenaed material. (This extra time was paid for by the Smith's- a totally needless expense.) Yet there was no documentation that the Board had done anything.

Brock now indicates in her letter of May 9th to Mrs. Smith that there was over 800 pages sent to the Board, subsequently to the Inquiry panel (and finally to my hands). Brock further states that the panel determined, based on the information in its possession, that there was not sufficient information to believe the CFP Boards Code had been violated. Yet where are the memos, reports, research or commentary of any form that shows that the Board/panel did anything at all? 800 pages of detailed information, dates, and reports and, supposedly, nothing was EVER committed to the written form? NOTHING? To remotely suggest that a compulsory review commits nothing to writing is a joke. Since such material is, apparently, non existent, the exoneration- Code or otherwise- has no validity whatsoever. Per my last communication, it would take a minimum of 50 man hours in order to go through the extensive documentation in those boxes. Minimum 50 hours. There would need to be extensive calculations, a formal budget compiled, a revamped net worth, numerous phone calls to both defendant and plaintiff and their agents, calls to the insurance and annuity companies to validate what Johnson had submitted (and why) and much, much more. I do know that no such calls or communications were ever made on the Smith's- just a singular prior communication by the Board that insufficient information had been provided to them on which to continue the Board's investigation. Well, of course she could not provide a report. She does not have the insight or professional background to provide a detailed report. That is why I was subsequently hired. She relied on the CFP Board to do a formal review- which it did not. To infer that the 800 of these pages did not possess the insight to Code violations is ludicrous in the extreme. To infer that there was nothing in 800 pages that were in direct violation of the Code is moronic. If the Board did not wish to instigate a formal review- which it previously stated since a specific report from the Smith's was not available- then fine, simply state so. But don't continue an investigation when a competent review was neither contemplated nor probable.

Determining a Client''s Personal and Financial Goals, Needs and Priorities: The financial planning practitioner and the client shall mutually define the client''s personal and financial goals, needs and priorities that are relevant to the scope of the engagement before any recommendation is made and/or implemented.

In the Board's letter to Johnson it requested the financial plan after Victor Smith had died. There was none and Johnson so stated. Is it the Board's position that when something is NOT received- and is obvious that such information is necessary- that it simply is not considered in the scope of the inquiry? There is not a financial professional entity in existence who would remotely terminate an investigation because a material item was not included. The whole point of a financial plan (ever heard of one?) is an analysis of the client's position. You cannot consider- certainly sell- a product unless it meets suitability standards. A plan defines that. It is inconceivable to any professional entity to attempt a formal analysis without indispensable material in hand, formally (re)constructed or that becomes available by demand. Since Johnson had not done one, it became incumbent that one be constructed. You cannot define the plusses or minuses of a plan unless there was a plan. There has to be a plan!

As regards Rule 703- it requires a financial planning practitioner to "make and/or implement only recommendations which are suitable for the client." Is an variable annuity inside an IRA suitable in the early 90's? Was that information included in 800 pages? Take a guess.

Is the sale of solid bonds to invest in a loaded bond fund "suitable"? Was that information included in 800 pages? Take a guess.

200-2: Obtaining Quantitative Information and Documents The financial planning practitioner shall obtain sufficient quantitative information and documents about a client relevant to the scope of the engagement before any recommendation is made and/or implemented.

Where is the plan? Has anyone heard that financial planning requires a plan? Gee, is that something new? But since it was not addressed by Johnson and hence not received, does one simply exclude the relevance? The Board at least asked for it, yet it was never done. Doesn't someone think there is a problem if a material item is non existent? This is financial planning for clients after the death of a loved one. A revised plan is mandatory. MANDATORY! Even novices know that. The lack of a plan updating assets and income after the death of a husband/father is, in itself, a violation of any activities by Johnson. If you don't know what you are doing in updating crucial evidence- furthermore don't care- you will violate a myriad of standards. The lack of such plan is so obvious that it defies credulity at any level. The Smith's were in a terrible emotional state due to the death of a father/husband- they relied on Johnson. And Johnson sold a completely unnecessary product that was going to take all of their assets and income to pay for it. There is no way that a client could pay $180,000 for a $5,000,000 variable life policy on a $5,000,000 estate (that had not grown in almost 10 years) with a net income less than $200,000. Was that information included in 800 pages? Take a guess. Admittedly you are not a planner. Apparently neither is anyone else. But it does not take a professional to figure out the above. Even Brock can do that. Unless you were completely torpid, no one would buy a policy that would lead them to the poor house. The Board is effectively saying that is acceptable because an updated plan had not been submitted(?). That is absolutely moronic .

300-1: Analyzing and Evaluating the Client''s Information A financial planning practitioner shall analyze the information to gain an understanding of the client''s financial situation and then evaluate to what extent the client''s goals, needs and priorities can be met by the client''s resources and current course of action.

Does somebody think that using more than a client's net income to pay for an unneeded and wrong type of insurance policy in an irrevocable trust that pays nothing more than the value of the estate itself is proper planning? Was that information included in 800 pages? Take a guess.

Principle 2 states ""A CFP Board designee shall be objective in providing professional services to clients."" Rule 201 states ""A CFP Board designee shall exercise reasonable and prudent professional judgment in providing professional services"" and Rule 202 states ""A financial planning practitioner shall act in the interest of the client."The financial planning practitioner shall investigate products or services that reasonably address the client''s needs. The products or services selected to implement the recommendation(s) must be suitable to the client''s financial situation and consistent with the client''s goals, needs and priorities.

You do NOT offer a variable life policy inside an irrevocable trust for client's such as the Smith's. Even Brock should know that. (Yes, I am more than annoyed at Brock. I do not like liars- certainly ones that violate basic principles of ethics, honesty and integrity. And ones that violate the duty to consumers and that requires extensive and unnecessary additional work. There was and is no rationalization for actions like this. The extra cost to the Smith's must be borne by the Board. It was responsible for the costs.)

I could elaborate many, many areas of Standard violations. But what is the point? The Board and the panel had over 800 pages- far more than what I started with. While my background is greater than other planners, it does not take more than common sense to see the direct infractions of numerous standards. The Inquiry panel had to do an............inquiry . Isn't that the point? It cannot simply offer an exoneration without supporting documentation that it addressed the material received against the standards. It has to have done something that validates the exoneration. Yes, I know all the excuses the Board attempts because it is private and non profit. But absolute arrogance and ineptness is not part of any accepted rationalization, public or private.

There are only a couple conclusions. Fraud by the Board in doing nothing and still providing an exoneration; collusion with Johnson; or that the Board and its representatives are incompetent and the Inquiry panel is a complete sham.

Which is it? The statement by Brock that the panel could find nothing is insulting and sophomoric. As stated, it was relatively easy to clearly spot obvious violations of many basic planning elements- financial planning, insurance, estate planning , investments and more (though it did require many hours of review to put into focus). Certainly if an Inquiry panel is incapable of doing its job due to incompetency and/or fraud, the Board should have been able to figure that out. One simple method is reviewing the Inquiry Panels report. (Oh, sorry, there was no report!)

I have been in direct contact with the Board's officers and directors for over 10 years and have witnessed continued fraud, illegality and breach of fiduciary duty. The Board's president lied to state investigators and the Board condoned it. I am still the only fully licensed and legal CFP in California who can offer comprehensive fee services. The collusion with the bulk of CFP's throughout the United States is shameful. It continues today under your watch. The position that the Board will not institute an ethical violation unless preceded by a legal one is a mockery of the very standards it says it upholds. Regardless of the non profit status, your position as CEO still demands honesty and integrity and ethics. It is remiss. You cannot pontificate testimonials to consumers and the media asserting competency and ethics ("competent and ethical financial planning" comes from the Board's web site) where the Board itself- with you at its helm- are lying about these very standards. What is the sense of filing a complaint if it will not be professionally reviewed. There has to be a substantive and formal examination of the evidence.

At some point you are going to have to grow up and determine what your own values are and that of the office you represent. This scenario has been a fraud by the Board, its staff, and its selected representatives from inception.

I am fully aware of the harshness of this letter. I am also fully aware of its truth. Furthermore, I am more than fully aware of the hardships- both financially and emotionally- that have been suffered by the Smith's. It is extensive and ongoing. And a large part is due directly to the ineptness and quackery presented by the Board in referencing its ability and willingness to review complaints by consumers. This debacle should have been nipped in the bud a longtime ago. All of you should be ashamed.

Very Truly,

Errold F. Moody Jr.

P.S. The additional work caused by Brock's lies amounted to $1,140 and was billed to the Smith's on 3/31/05. When can they expect reimbursement? Don't play games with this- the Board caused the cost and would demand restitution of any of its agents. The Board cannot lie, deceive and breach a duty without accepting responsibility for its own actions.