Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Financial Planning > Tax Planning

12 Worst Financial Advisors in America: 2015

Your article was successfully shared with the contacts you provided.

A year has passed since ThinkAdvisor last surveyed the damage done by the small minority of financial advisors that take advantage of their clients in a big way. As in past years, ThinkAdvisor had no trouble finding bad actors to fill its list of worst financial advisors.

The amount of money stolen from clients is only one factor ThinkAdvisor considered when ranking the crimes of investment advisors. Often the identity of the victims or even that of the advisor made the deed particularly loathsome.

Some criminals aren’t above trading on religion or patriotism to pull off their scams. Such misbehavior moved them higher on the list of Worst Financial Advisors in America 2015.

Related on ThinkAdvisor:

Bryan Binkholder

12. Bryan Binkholder

Fraud: $3.6 million

(St. Louis area)

Bad advice from the coach …

He billed himself as the “Financial Coach” during appearances on radio and online. He should have been flagged for unsportsmanlike conduct. In the end, he pleaded guilty in the theft of money he solicited for real estate ventures. For his bogus advice he received nine years in prison and was ordered to pay restitution.

Phillip A. Kenner

11. Phillip A. Kenner & Tommy C. Constantine

Fraud: Siphoning off $30 million of clients’ investment funds

(Long Island)

Vroom, Vroom …

Kenner, a former college hockey player turned financial advisor, teamed with former racecar driver Constantine to raise more than $30 million from clients who lived in the Long Island area of New York. The list of investors who thought they’d strike it rich included NHL stars, as well as police officers and others. Instead of being used for investments that included a land-development deal in Hawaii, the bulk of the money was diverted to personal accounts, a jury found. The men, who both live in Scottsdale, Arizona, face decades in prison and hefty fines when they are sentenced in November.

Jane E. O’Brien

10. Jane E. O’Brien

Fraud: $825,000

(Needham, Massachusetts)

Catch me once …

When O’Brien was convicted in 2013 for taking $250,000 from a client it seemed bad enough. She was sentenced to 33 months in prison. It turns out that was just the tip of the iceberg. This April, O’Brien was convicted for other crimes the judge said she had covered up during the first investigation. He added 45 months to the prison term from 2013 and ordered O’Brien to make more that $800,000 in restitution. O’Brien, who had worked for Merrill Lynch and Smith Barney, persuaded clients to liquidate accounts and give the money to her to be invested. Instead, as is all too common, she used it for her own purposes.

David Williams

9. David Williams

Fraud: $4 million

(Sherman Oaks, Calif.)

California dreaming …

Williams used his position as CEO of Morgan Peabody to perpetrate a scam that relieved about 60 investors of their cash. Instead of using the fund he created to invest in real estate (to generate what he claimed would be 9% annual returns), Williams invested in himself, including the purchase of a $6 million home. In a plea deal consummated during a jury trial, Williams also admitted to tax fraud. He faces a maximum of 70 years in prison when he is sentenced later this year.

Gignesh Movalia

8. Gignesh Movalia

Fraud: $9 million

(Tampa, Florida)

Social media scammer …

Facebook was the hottest IPO going and Movalia figured out a way to get in on the action. Movalia used his OM Global Investment Fund to solicit $9 million that was to be used to invest in Facebook, whose IPO shares the advisor said he could access. Instead, Movalia admitted he used the money for other investments and misrepresented account values to his clients. He awaits sentencing.

James Tagliaferri

7. James Tagliaferri

Fraud: $120 million

(Connecticut & Virgin Islands)

Not just a young man’s game …

Tagliaferri, at 75 years old, has the distinction of being the oldest miscreant on our list for 2015. He was convicted of using funds from more than 100 investors in TAG Virgin Islands to invest in illiquid or private companies. In exchange, he received more than $3 million in kickbacks. When investors asked for their money, Tagliaferri started down the Ponzi scheme path to pay them back. He also used funds to help prop up companies he was associated with, including a Long Island horse racing firm that owned Big Brown, the thoroughbred that fell one win short of the 2008 Triple Crown. For the scam, which ran from 2007 to 2010, he received six years in prison, was fined $2.5 million and had to forfeit property in the Virgin Islands.

Michael Szafranski

6. Michael Szafranski

Fraud: $1.4 billion

(Fort Lauderdale, Fla.)

Let’s make a deal …

The investment advisor was snared into the investigation of a major Ponzi scheme. For his guilty plea and the prospect of a maximum of five years in prison Szafranski is expected to testify against TD Bank executive Frank Spinosa. He will be the second person to stand trial in the investigation into a Ponzi scheme for which Scott Rothstein is serving a long prison sentence. Szafranski apparently did not know the clients he recruited for Rothstein were being funneled into a scheme that was first exposed in 2009.

5. Michelle Kern

Fraud: $642,000

(Roseville, California)

Nothing sacred, Part I …

On the surface, Kern’s crimes were run of the mill. It’s unfortunate but true that embezzling money from clients for her own use doesn’t rate high on the unusual scale. But the former financial advisor for Ameriprise had another crime up her sleeve, according to local prosecutors who say she embezzled money from a Placer County church. The feds, according to reports, say the cases are likely connected to Kern’s time at Ameriprise. Kern pleaded guilty and received three years in prison and agreed to pay back her 20 known victims.

Jim Staley

4. Jim Staley

Fraud: $3.3 million

(St. Charles, Mo.)

Nothing scared, Part II …

You might believe a pastor whose day job was serving as a financial advisor would be trustworthy. Staley, already controversial for his Passion for Truth Ministries, proved that notion wrong. In a packed federal court, Staley admitted to ripping off elderly clients. While he didn’t target any of his congregants, some of his clients said they trusted him because of his religious affiliation. As owner of a financial consulting firm, he cheated 16 investors out of $3.3 million. Staley received seven years in prison on four counts of wire fraud.

Sean Meadows

3. Sean Meadows

Fraud: $10 million

(Eden Prairie, Minnesota)

“Have a good life, Sean …”

A gambling addiction was at the root of Meadows’ misdeeds, which included convincing more than 70 clients, many of whom were elderly or disabled, to purchase annuities they didn’t need so he could collect commissions. Meadows convinced some clients to refinance their homes to raise money to invest with him. In addition, he failed to provide promised accounting services including paying state and federal taxes owed by clients. He used the money to finance his own lifestyle and to pay investors when they wanted their money. The judge didn’t buy his apology and the prosecutor said it was unlikely restitution promised by Meadows could ever be made. When he was sentenced to 25 years in prison, his victims cheered, with one onlooker calling out, “Have a good life, Sean.”

Michael T. Hardman

2. Michael T. Hardman

Fraud: $1.75 million

(Palm Beach County, Fla.)

This was definitely not part of the Program …

Hardman broke the trust of Alcoholic Anonymous by enlisting his fellow group members and elderly investors who had been clients of his deceased father’s brokerage business in a phony investment scheme. In all, he issued phony promissory notes to 30 victims. Hardman made a bid to be placed under house arrest so he could work as a tax preparer to pay back his victims. Alas, the judge didn’t buy it and sent him to prison for 10 years.

Paul Gierten

1. Paul Gierten

Fraud: $39,000

(Centralia, Illinois)

Sorry, sir, that is FUBAR …

Gierten, 47, stole a relatively small sum, but his victim – a military veteran in his 80s – is what makes his crime worthy of note. The victim told the court he used Gierten because Gierten said the money was for an investment in a business that assisted military veterans. Gierten was convicted of using his client’s funds to pay his personal expenses. He was sentenced to 15 months in prison and ordered to pay $38,300 in restitution.

Related on ThinkAdvisor:


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.