The Securities and Exchange Commission (SEC) on Thursday charged a broker and his company based in Danbury, Conn., with stealing at least $600,000 from clients and using the money to pay for his mortgage, grocery bills and other personal expenses.
The SEC alleges that Stephen B. Blankenship persuaded about a dozen clients—including some retirees and others he met at church—to withdraw money from their brokerage accounts he managed at other firms and instead invest with him directly. As part of his scheme, he assured them they could obtain a greater rate of return on their money by transferring it to his firm, Deer Hill Financial Group.
According to the SEC, Blankenship claimed he was investing their money in established securities such as publicly traded mutual funds. But in reality he made no investments and merely transferred customer money to his own bank account, and he misused it to pay his mortgage, travel and grocery bills among other personal expenses. Blankenship also paid some business expenses and made Ponzi-like payments to other customers who requested a return of all or part of their investment.
In a parallel action, the U.S. Attorney’s Office for the District of Connecticut on Thursday announced criminal charges against Blankenship.
“Blankenship took advantage of fellow churchgoers and senior citizens who relied on their savings for retirement and placed their trust in him,” said David P. Bergers, director of the SEC’s Boston Regional Office, in a statement. “He betrayed that trust by using their money to make personal credit card payments and home improvements.”