Irvine, CA | January 14, 2026
Gary Thomas Madrid (CRD# 1934700), a financial advisor currently registered with WestPark Capital, Inc. in Irvine, California, is facing a pending FINRA arbitration alleging breach of fiduciary duty, negligence, and violations of Regulation Best Interest related to recommendations to purchase GWG bonds. According to FINRA Case #25-01666 filed in August 2025, the complaint seeks $50,000 in damages. Madrid also has three outstanding federal tax liens totaling over $271,000 dating back to 2012, raising serious questions about financial responsibility. This case highlights significant concerns about broker misconduct, unsuitable recommendations of high-risk bonds, and investment fraud involving alternative investments.
BrokerCheck Snapshot
Name: Gary Thomas Madrid
CRD #: 1934700
Firm: WestPark Capital, Inc.
Location: Irvine, CA
Years in Industry: 36
Number of Disclosures: 4 (1 customer dispute, 3 tax liens)
Pending $50,000 GWG Bonds Arbitration
FINRA Arbitration Case #25-01666
On August 13, 2025, a customer filed a FINRA arbitration complaint against Gary Madrid alleging breach of fiduciary duty, negligence, and violations of Regulation Best Interest.
Arbitration Details:
- Date Filed: August 13, 2025
- Employer When Activities Occurred: WestPark Capital, Inc.
- Product Type: Direct Investment-DPP & LP Interests
- Allegation: Customer alleges that the recommendation to purchase GWG bonds constituted a breach of fiduciary duty, negligence, and violations of Reg BI
- Alleged Damages: $50,000.00
- FINRA Case Number: 25-01666
- Status: Pending
The complaint specifically references GWG bonds, which became one of the most notorious investment failures in recent securities industry history. The allegations of Regulation Best Interest violations suggest Madrid may have recommended these high-risk bonds without adequately considering the customer’s investment profile or properly disclosing the risks involved.
The GWG Holdings Collapse: A Cautionary Tale
GWG Holdings and its GWG L Bonds represent one of the most significant retail investor disasters of the past decade. Understanding what happened with GWG is critical to understanding the allegations against Madrid.
What Were GWG L Bonds?
GWG Holdings, Inc. sold unsecured debt securities called “L Bonds” directly to retail investors, raising approximately $1.6 billion from over 40,000 investors nationwide. The company claimed to use investor funds to purchase life insurance policies on the secondary market, then profit when policyholders died and policies paid out.
The Collapse:
- April 2021: GWG Holdings filed for Chapter 11 bankruptcy protection, revealing the company was insolvent
- Investor Losses: Investors lost billions as the L Bonds became essentially worthless
- Regulatory Scrutiny: Multiple state securities regulators and FINRA opened investigations into the sale of L Bonds
- Class Actions: Numerous lawsuits were filed against GWG and the brokers who sold the bonds
Why GWG Bonds Were Problematic:
Unsecured Debt: L Bonds were unsecured, meaning investors had no collateral backing their investment if GWG failed.
Illiquid: The bonds could not be easily sold before maturity, trapping investors’ money for years.
High Risk: The business model of buying life insurance policies and waiting for people to die carried enormous risks and ethical concerns.
Misleading Marketing: GWG marketed the bonds as offering high yields (7-8.5%) with supposedly “low risk,” which was fundamentally misleading given the actual risk profile.
High Commissions: Brokers earned substantial commissions—often 6-8%—for selling L Bonds, creating conflicts of interest.
Complex Structure: The life settlement business model was complex and difficult for average investors to understand.
Regulation Best Interest Violations
The complaint specifically alleges violations of Regulation Best Interest (Reg BI), the SEC rule that took effect in June 2020 requiring broker-dealers to act in the best interest of retail customers when making investment recommendations.
How GWG Bond Recommendations Could Violate Reg BI:
Lack of Reasonable Basis: A broker must have a reasonable basis to believe a recommendation is in the customer’s best interest. Given GWG’s ultimate bankruptcy and total loss to investors, recommending L Bonds to retail customers may have lacked any reasonable basis.
Unsuitable for Retail Investors: GWG bonds were complex, illiquid, high-risk investments that were generally unsuitable for retail investors, particularly those seeking income or conservative investments.
Inadequate Risk Disclosure: Brokers who emphasized the high yields while minimizing the substantial risks violated the disclosure obligation under Reg BI.
Conflict of Interest: The high commissions paid on L Bonds created conflicts that needed to be disclosed and addressed. Recommending L Bonds primarily because of the commission violates Reg BI.
Pattern of Complaints / Risk Factors
While Madrid has one customer dispute disclosure, the nature of the GWG bond allegations—involving breach of fiduciary duty, negligence, and Reg BI violations—combined with over $271,000 in outstanding federal tax liens, may indicate concerns related to financial irresponsibility, sale of high-commission alternative investments, inadequate due diligence on complex products, or failure to supervise. Investors who purchased GWG bonds or other illiquid alternative investments through Madrid should carefully review their losses and seek legal guidance.
Outstanding Federal Tax Liens: Over $271,000
Madrid has three outstanding federal tax liens totaling over $271,000, demonstrating a pattern of failure to meet tax obligations spanning more than a decade.
Tax Lien #1 – Filed June 2023:
- Amount: $200,105.29
- Lien Holder: Gary & Cheryl Madrid
- Type: Tax lien
- Date Filed: June 26, 2023
- Court: County Recorder, Santa Ana, CA
- Case Number: 475030923
- Status: Outstanding (Yes)
- Date Learned: July 14, 2023
Tax Lien #2 – Filed September 2019:
- Amount: $37,076.00
- Lien Holder: Gary & Cheryl Madrid
- Type: Tax lien
- Date Filed: September 3, 2019
- Court: County Recorder, Orange County, CA
- Case Number: 2019000329324
- Status: Outstanding (Yes)
- Date Learned: September 5, 2019
Tax Lien #3 – Filed May 2012:
- Amount: $34,077.36
- Lien Holder: IRS
- Type: Tax lien
- Date Filed: May 18, 2012
- Court: Department of the Treasury-IRS, Orange County, CA
- Case Number: 869264912
- Status: Outstanding (Yes)
- Date Learned: August 6, 2014
Financial Responsibility Concerns:
The existence of three outstanding federal tax liens spanning from 2012 to 2023 raises serious questions about Madrid’s financial responsibility and judgment. A broker who cannot manage their own financial obligations may not be well-positioned to provide sound financial advice to clients. Additionally, financial stress can create incentives to recommend high-commission products regardless of suitability.
Madrid’s Career Background
Gary Thomas Madrid has worked in the securities industry for 36 years across multiple brokerage firms.
Current Position:
- WestPark Capital, Inc. (July 2016 – Present) – Registered Representative in Irvine, CA
Previous Firms:
- Newport Coast Securities, Inc. / Grant Bettingen, Inc. (June 2008 – July 2016) – 8 years in Irvine/Newport Beach, CA
- GunnAllen Financial, Inc. (July 2007 – June 2008) – Irvine, CA
- BrookStreet Securities Corporation (November 1994 – July 2007) – 13 years in San Juan Capistrano, CA
- Toluca Pacific Securities Corp. (November 1990 – November 1994) – Burbank, CA
- Whitehall Investment Securities, Ltd. (July 1990 – October 1990)
- The Stuart-James Company, Incorporated (June 1989 – July 1990) – Denver, CO
Securities Licenses:
- Series 7 (General Securities Representative) – passed June 1989
- Series 79 (Investment Banking Representative) – passed January 2023
- Series 63 (Uniform Securities Agent State Law) – passed February 1992
- SIE (Securities Industry Essentials) – passed October 2018
Madrid currently holds licenses in 20 U.S. states and territories, giving him a broad geographic reach for selling securities.
Outside Business Activity:
Madrid serves as an insurance agent, recommending fixed and indexed annuity products. This dual role as both securities representative and insurance agent can create conflicts of interest, particularly when commission structures favor one product type over another.
The GWG Bonds Sales Scandal
The sale of GWG L Bonds has become a major focus of securities regulators and plaintiffs’ attorneys nationwide. Thousands of investors lost their entire investments when GWG filed for bankruptcy in 2021.
Regulatory Actions:
Multiple state securities regulators have taken action against firms and brokers who sold GWG bonds, finding:
- Failure to conduct adequate due diligence on the issuer
- Unsuitable recommendations to retail investors, particularly retirees
- Inadequate disclosure of risks
- Overconcentration of client portfolios in GWG bonds
- Failure to supervise representatives selling the bonds
Common Victim Profile:
GWG bonds were frequently sold to:
- Retirees seeking income who were attracted by the 7-8.5% yield
- Conservative investors who were told the bonds were “low risk”
- Investors with limited liquidity needs who didn’t understand they couldn’t access their money
- Elderly investors who were particularly vulnerable to the “safe income” pitch
Warning Signs Investors Missed:
Many investors who purchased GWG bonds didn’t realize the red flags:
- The high commission brokers earned (often 6-8%)
- The lack of any secondary market to sell the bonds
- The speculative nature of the life settlement business
- GWG’s mounting debt and deteriorating financial condition
- The concentration risk of having too much invested in a single issuer
Recovering Losses from GWG Bonds
Investors who purchased GWG bonds and suffered losses may be entitled to recover damages through FINRA arbitration, even if GWG itself is bankrupt.
Key Legal Theories:
Breach of Fiduciary Duty: If the broker owed fiduciary duties (as an investment adviser), they breached those duties by recommending unsuitable, high-risk bonds.
Negligence: Brokers must exercise reasonable care in making recommendations. Failing to conduct due diligence on GWG or understand the risks constitutes negligence.
Regulation Best Interest Violations: For recommendations made after June 2020, violations of Reg BI provide a strong basis for claims.
Failure to Supervise: Brokerage firms failed to adequately supervise representatives selling GWG bonds and failed to conduct proper due diligence on the product.
Misrepresentation: Many investors were told GWG bonds were “safe” or “low risk,” which was fundamentally false.
Patil Law, P.C. has over 15 years of experience representing investors in FINRA arbitration and securities litigation, with more than $25 million recovered for clients across 1,000+ cases. We provide a free, confidential consultation to review your potential claim. Our firm works on a contingency fee basis, meaning you pay no attorney fees unless we successfully recover money for you.
About FINRA Arbitration
FINRA arbitration is a streamlined dispute resolution process for securities-related claims. It offers a faster, more cost-effective alternative to traditional court litigation. Most cases are resolved within 12-16 months. Claims generally must be filed within six years of the incident.
Related Brokers and Firms
Gary Thomas Madrid is currently registered with WestPark Capital, Inc. Investors who purchased GWG bonds or other alternative investments through WestPark Capital or Madrid’s previous firms should review their losses carefully.
For more information about recovering losses from unsuitable bond recommendations and alternative investments, visit our pages on broker misconduct, investment fraud, and FINRA arbitration.
Understanding GWG Bond Claims
What exactly happened with GWG Holdings and why did investors lose money?
GWG Holdings sold L Bonds to retail investors, raising approximately $1.6 billion from over 40,000 investors. The company claimed to invest in life insurance policies purchased on the secondary market, profiting when policyholders died. In April 2021, GWG filed for Chapter 11 bankruptcy, revealing it was insolvent and unable to repay bondholders. The bonds became essentially worthless, and investors lost their entire principal. The bankruptcy resulted from a flawed business model, excessive debt, regulatory scrutiny, and deteriorating financial performance that the company concealed from investors.
How can I recover money if GWG itself is bankrupt?
While GWG is bankrupt and unlikely to repay investors, you may still recover losses by filing claims against the brokerage firm and broker who recommended the bonds. Brokerage firms have insurance and capital requirements that can fund settlements and arbitration awards. Legal theories for recovery include breach of fiduciary duty, negligence, Regulation Best Interest violations, failure to supervise, and misrepresentation. Even though the issuer is bankrupt, the broker and firm can still be held liable for recommending an unsuitable, high-risk investment without proper disclosure.
What made GWG bonds unsuitable for retail investors?
GWG bonds were unsuitable for most retail investors because they were unsecured debt with no collateral backing, completely illiquid with no secondary market to sell before maturity, extremely high risk despite being marketed as “safe income,” based on a speculative business model involving life insurance policies, issued by a company with mounting debt and deteriorating finances, and sold with high commissions creating broker conflicts of interest. Suitable investments for retail investors typically have liquidity, transparency, regulatory oversight, and risk levels matching the investor’s profile. GWG bonds had none of these characteristics.
How do I know if my broker violated Regulation Best Interest?
Regulation Best Interest (Reg BI) violations occur when brokers fail to act in your best interest when making recommendations. Signs your broker violated Reg BI include recommending GWG bonds without thoroughly understanding the risks, failing to disclose the high commissions they earned, representing the bonds as “safe” or “low risk” when they were actually highly speculative, not considering whether the illiquidity was appropriate for your situation, concentrating too much of your portfolio in GWG bonds, or continuing to recommend holding the bonds even as GWG’s financial condition deteriorated. If your broker made the recommendation after June 30, 2020, when Reg BI took effect, these violations provide strong grounds for a claim.
What evidence do I need to file a claim about GWG bonds?
Critical evidence for a GWG bond claim includes account statements showing purchases of L Bonds with dates and amounts, trade confirmations and prospectuses, communications with your broker about the recommendations, account opening documents showing your stated risk tolerance and objectives, any marketing materials or presentations about GWG bonds, and records of what your broker told you about the safety and risks. Additionally, preserve any emails, text messages, or recorded conversations. Documentation showing overconcentration—such as GWG bonds representing more than 10% of your portfolio—is particularly valuable, as is evidence of misrepresentations about the bonds being “safe” or “government-backed.”
Can outstanding tax liens against my broker affect my claim?
While tax liens don’t directly impact your investment claim, they raise important credibility issues. A broker with over $271,000 in outstanding federal tax liens demonstrates poor financial judgment and responsibility. This information can be relevant to show the broker was under financial stress and may have been motivated to recommend high-commission products like GWG bonds regardless of suitability. Additionally, financial problems can undermine a broker’s credibility when they dispute your claims. The existence of multiple tax liens spanning over a decade suggests a pattern of financial irresponsibility that may have influenced their investment recommendations.
About Patil Law, P.C.
Patil Law, P.C. is a securities litigation firm dedicated to representing investors who have suffered losses due to broker misconduct, unsuitable recommendations, and securities fraud. Founded in 2018 by attorney Chetan Patil, the firm focuses exclusively on FINRA arbitration and investment loss recovery.
With over 15 years of combined experience in securities law, Patil Law has successfully recovered more than $25 million for clients across 1,000+ cases. Attorney Chetan Patil earned his law degree from Case Western Reserve University School of Law. Attorneys Gabriela Dubrocq and Patricia Herrera earned their law degrees from University of Miami. The firm handles cases nationwide involving unauthorized trading, churning, unsuitable investments, breach of fiduciary duty, and failure to supervise.
Patil Law works on a contingency fee basis, meaning clients pay no attorney fees unless the firm successfully recovers money on their behalf. All consultations are free and confidential.
Contact Patil Law Today
If you purchased GWG L Bonds through Gary Thomas Madrid at WestPark Capital or any other broker and suffered losses when GWG filed for bankruptcy, we encourage you to contact us for a free consultation. Time limits apply to filing FINRA arbitration claims, so don’t delay.
Call: 800-950-6553
Email: info@patillaw.com
Website: investmentlosslawyer.com
There is no cost and no obligation. We’re here to help you understand your rights and options.
The information in this post is based on FINRA BrokerCheck records and public filings. Allegations described are pending or unproven and may be contested. All investors are entitled to fair treatment under securities laws. This is attorney advertising. Prior results do not guarantee a similar outcome. This communication is for informational purposes only and does not create an attorney-client relationship.