A pioneer of the fee-only financial planning movement has pleaded guilty to embezzling more than $3 million from her clients. The New Orleans-based planner promised returns of between 13 percent and 26 percent to prospects who invested in two companies, authorities said. In fact, the companies were just UPS store mailboxes. Using classic Ponzi techniques, the planner engaged in illegal wire transfers from her clients’ Charles Schwab custodial accounts to her personal accounts. Once in hand, the money was used for clothing, vacations and rent payments. The advisor is now facing a maximum prison sentence of 20 years, a fine of $250,000, and three years of supervised release for each count against her.
A Miami Beach, Florida advisor was convicted by a Virginia jury of misappropriating as much as $126 million in client funds. The money was supposedly held in trust in a purported capital gains deferment program. Instead, it was used to support a lavish lifestyle, including the purchase of an aircraft, yacht, and other luxury items. The advisor also used the money for business operating expenses and commercial real estate investments.
A former California man was arrested in Hong Kong for an alleged investment scheme involving two hedge funds he ran. The advisor promised investors returns as high as 20 percent to 30 percent a year. Instead, he moved investor funds to offshore accounts and then misappropriated $5 million. The advisor closed out his accounts and fled to Hong Kong, but he was captured and is being extradited back to the United States.
Harry Lew is the communications and content director for the National Ethics Bureau.