A year has passed since our sister site, 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.
12. Bryan Binkholder
Fraud: $3.6 million
What Your Peers Are Reading
(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.
11. Phillip A. Kenner & Tommy C. Constantine
Fraud: Siphoning off $30 million of clients’ investment funds
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.
10. Jane E. O’Brien
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.
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 percent 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.
8. Gignesh Movalia
Fraud: $9 million
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.
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.
6. Michael Szafranski
Fraud: $1.4 billion