The Securities and Exchange Commission has charged a 77-year-old Amish financial advisor for defrauding 2,600 mostly Amish investors. The Ohio advisor raised $33 million from the investors, promising them he’d purchase risk-free government securities. Instead, he made high-risk investments, sustained losses and then provided account statements showing fabricated gains. In the end, he lost $15 million in client assets from multiple generations of Amish families. The advisor filed for bankruptcy in June 2010.
A California financial advisor was arrested for felony theft from a senior citizen. According to authorities, the advisor convinced an elderly victim to obtain a reverse mortgage in order to fund home repairs. A year later, he convinced the victim to give him $25,000 for an investment he promised would pay a 10 percent return in six months. The advisor never returned the $25,000 or paid the 10 percent interest. The advisor then convinced the client to buy a life insurance policy with a $60,000 premium. After the policy was issued, the client requested a $15,000 hardship withdrawal. The advisor instead requested a $20,000 withdrawal. When the check arrived, the consumer notified him of the extra amount. The advisor asked her to send the difference in a check made out to him. He then sent the insurance company a $5,000 check, which bounced. Finally, the advisor borrowed $7,000 from the client but failed to repay $2,500. In all, the advisor defrauded the elderly client of $32,500.
A New York financial advisor has pleaded guilty to obstructing IRS laws. According to the government, the advisor owned a tax and investment advisory business that promoted abusive tax shelters built upon multi-layered trust schemes. The arrangements allowed clients to illegally reduce their federal income taxes by diverting business income through a series of sham corporations and trust. The advisor also counseled his clients to submit frivolous documents and letters to the IRS to obstruct audits. The advisor used the abusive trusts himself, which led him to file false income tax returns and underpay his by more than $1.7 million.