Former FBI agent scams clients for $1 million

Editor’s Note: The bad apples keep popping up in the financial services industry with this latest edition of rogue advisors on parade. Take a look at the latest fraudsters and con artists on display. If you learn of bad practices while you’re out in the field, you can send us an email at [email protected].

A former FBI agent and his wife have pleaded guilty to scamming 11 Virginia investors out of more than $1 million. The husband, a Certified Financial Planner, established an investment management firm in 2003 after retiring from the Bureau. He offered insurance and estate and tax planning through that firm, while providing investment advisory services through an Indiana-based RIA firm. According to authorities, the advisor and his wife sold investments through misrepresentation and omissions. They also made false statements to the SEC, and used funds from earlier investors to pay off later ones. As penalty for their crimes, the husband received an 11-year, three-month prison sentence, and his wife received a three-year jail term. They also were ordered to forfeit $1.3 million in ill-gotten gains, as well as pay more than $1.2 million in restitution.

An annuity agent who stole more than $1 million from five elderly clients was charged and convicted and will now serve 75 months in prison. The agent, who operated in Washington State, victimized elderly clients aged 74 to 90. Instead of investing their money as promised, the agent pocketed it, spending thousands of dollars on clothes, jewelry, and a trip to Mexico. She also made large payments to online psychics, including $20,000 to one in a single month. The agent’s insurer agreed to make the victims whole, including any tax penalties that may have occurred.

A sham investment advisor has been charged with fraud for swindling investors out of $3 million. The advisor used the money for gambling, illegal drugs, cigars, and family travel, instead of hedge-fund and other promised investments. According to federal authorities, the New York fraudster repeatedly misled investors while attempting to raise money for start-up companies. He allegedly provided clients with a phony biographical information and also hid his prior criminal convictions. According to the SEC, the scammer once sent clients an e-mail saying, “Best Trading Day Of My Life!!!!!!! Up over 400 percent and documented. Mind boggling to say the least.” However, in reality, he didn’t make a single trade that day. He also claimed in his LinkedIn profile to have studied finance at the college level, when, in fact, he was a high school dropout.