Former Chamber of Commerce President Under Federal Investigation

Fair Oaks financial advisor and now former President, Thomas Hammond, is being investigated by Federal and Placer County detectives for unlawful investing of clients' money.

Federal agents as well as Placer County sheriff’s detectives, according to federal authorities, issued a search warrant for Hammond on March 31, according to KCRA.

No charges have been filed and the U.S. Attorney’s office has not confirmed the investigation.

Though details are still being gathered, residents, fellow financial advisors and Chamber of Commerce members have met the news with a mix of disbelief and surprise. Pulic perception of Hammond's abrupt and surprising Feb. 28 resignation now has many wondering what the real reasons were for his sudden departure.

"Well it's apparent he has some serious personal and business issues," said Fair Oaks Chamber of Commerce Director, Jan Bass-Otto. "He just submits his resignation to the Chamber and that was the last we heard from him."

Bass-Otto explained that multiple calls had been put into Hammond following the fallout since word broke on his ongoing investigation.

"We called at least twice," Bass-Otto said. "He must have had his phone shut off, or something."

Financial advisors  tend to work with companies such as Edward Jones, or are independent agents of large insurance and annuity companies, explained Alan Canton, owner of A.N. Canton Insurance Services in Fair Oaks.

"I've lived here for 29 years and I simply can't believe the allegations against Tom. He's been a pillar of the community and I'm sure this is a big mistake," said Canton.

Insurance agents and the representatives of the large financial firms have to abide by strict compliance regulations mandated by the companies and the state, Canton said. Most are paid a commission by the company or carrier they represent.

Others, like Hammond, are what Canton described as "Lone Rangers" who take client funds and invest them as they see fit. They charge a fee based on the amount invested, called AUM or "assets under management." It is usually around 1.5 percent per year. They do not get commissions for making sales.

Canton went on to explain that fee-based advisors claim they are more independent and can give unbiased opinions, as they are not paid if a client decides to buy something. Most require, or are given discretionary powers by the client and are able to do what they want with the money.

"While commission-based agents and reps compete with fee-based advisors, there is no one-size-fits-all approach," said Canton. "For most people an insurance agent and/or a stock broker (known in the trade as registered reps) are best. For very upscale clients, a fee-based advisor might be an advantage."

Insurance agents are far more constrained in what they are allowed to advise clients on than stock brokers, but both are far more regulated than independent fee-based advisors, Canton said.

Meanwhile, business continues as usual for the Fair Oaks Chamber of Commerce. Hammond’s resignation meant someone would have to quickly fill the vacant role Hammond left behind. Bass-Otto turned to former Chamber president and personal friend to Hammond, Don Troutman.

“It doesn’t bother me to have to do it,” said Troutman. “It’s an honor.”

Though Troutman can separate the business side of things, on a personal level, he maintains the allegations against Hammond won’t change their friendship.

“I’m sad he hasn’t contacted me,” Troutman said. “I’ve done everything to contact him, short of showing up at his home.”

Troutman has entrusted Hammond with many of his financial investments over the years.

When asked about Hammond’s ability to repay Troutman on his investments, Troutman said, “I’ve never had to ask him about it. He’s always paid me back on time.”

Should the investigation prove Hammond was indeed guilty on the charges, Troutman encourages Hammond to take responsibility.

“I would support him through the difficulty,” Troutman said. “If he’s guilty, though, he should man up and clean it up.”