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Rogue advisors: Still plenty o' Ponzi schemes

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Authorities have charged an 80-year-old New York woman and her son with grand larceny for allegedly perpetrating a $10 million Ponzi scheme.

According to published reports, the pair convinced neighbors, relatives and acquaintances in the Lower Hudson Valley to invest large sums with their investment firm. They told customers their money would be invested in European bank notes or “metal securities.” Rather than make the promised investments, they just kept the money, making small monthly payments to encourage clients to keep investing. Authorities say the woman ran her investment firm from 1997 to 2003. The scheme began in 2006 and lasted four years. If convicted of the second-degree larceny charges, the mother and son each could face up to 15 years in state prison.

The Financial Regulatory Authority has barred a Virginia registered representative after he misappropriated more than $8,500 in client funds to qualify for a sales incentive program. The advisor apparently closed client accounts and withdrew funds without permission in order to open new accounts that would allow him to qualify for sales incentives. The advisor neither admitted to nor denied allegations but agreed to accept FINRA’s sanctions.

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A former Connecticut securities broker was sentenced to four years in prison for embezzling $1.7 million from his elderly clients, many of whom had entrusted him with their life’s savings. Prosecutors say the advisor liquidated his clients’ annuities and mutual funds without permission and used the proceeds to fund a lavish lifestyle. When clients brought their dwindling account balances to his attention, the advisor blamed market conditions. He also encouraged his clients not to look at their account statements because they were too “depressing.”

Harry Lew is the communications and content director for the National Ethics Bureau.