A Georgia financial advisor and registered representative pleaded guilty to mail fraud in connection with a scheme that victimized more than 10 clients and resulted in losses of $4.6 million. The advisor apparently convinced clients to liquidate other investments in order to purchase annuities with higher rates of return. However, instead of investing the funds, he converted the money to his own personal use. The advisor faces a potential jail term of up to 20 years and a $250,000 fine.
A California insurance agent was convicted of receiving nearly $9,000 in advance commissions. The agent wrote phony applications for five people using information provided by a business associate. When the insurer supplied policies for the applicants, the agent failed to deliver them. However, he forged the victims’ signatures on receipts and returned them to the insurer. The policies ended up lapsing after two months for non-payment of premium. When the company contacted the victims, it learned they had no knowledge of the policies. The agent was sentenced to five years probation, 750 hours of community service, and restitution of $9,000.
A Kansas resident was sentenced to 24 months in prison for a series of violations of the state’s securities acts. The advisor first solicited $8,000 from a state resident for a real estate investment that ostensibly returned three times the original investment. Instead of investing the client’s money, the advisor kept the funds for her own personal use. Then she convinced other investors to give her $25,000 to invest in pallets of merchandise that would be sold on the street. Again, the advisor used the money instead of investing it. Finally, the advisor convinced a couple to invest $10,000 for foreign currency trading, promising a 10 percent to 15 percent monthly return. Rather than investing the money, she gave it to her husband.
Harry Lew is the communications and content director for the National Ethics Bureau.