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October 12, 2018 at 10:30 AM
A South Carolina-based advisor was sentenced to 75 months imprisonment and five years supervised release for securities fraud, according to a statement released by U.S. Attorney Sherri Lydon.
In 2007, Melvin Leonard Wimmer Jr. started an investment firm in Greenwood, South Carolina called Cornerstone Capital (not affiliated with Cornerstone Capital Group, based in New York).
From 2010-2017, approximately 25 individuals invested $3.6 million with Wimmer. The investigation established that Wimmer pooled the money into one bank account, and he invested in high-risk securities and futures contracts.
Wimmer issued fraudulent account statements to his investors, according to Lydon. Soon after he started trading options and futures, Wimmer lost money, and he continued to lose money throughout the scheme.
In the statement, Lydon noted that “this prosecution illustrates the devastating impact that financial fraud inflicts on many Americans. Sadly, many of the victims in this case are elderly and lost all of their retirement savings. A free-market system cannot function without integrity in the financial markets.”
Instead of reporting the losses, Wimmer emailed his investors monthly account statements that falsely listed gains of 8% to 10% on an annualized basis. Wimmer manufactured and distributed false account statements from the outset, and he continued until the scheme collapsed. Wimmer also falsely represented the expected gains from trading, including the past performance of his trades, and he failed to inform the investors of the high risk of trading futures and options.
Of the $3.6 million invested, Wimmer lost approximately $3 million. Much of this money came from the investors’ retirement savings.
In addition to the prison sentence, the court also ordered Wimmer to pay more than $3 million in restitution.
In a letter submitted to the courts prior to sentencing, Wimmer wrote that he was “extremely remorseful for my actions and the losses incurred as a consequence of my poor decisions. In addition, the emotional and physical stress that I have caused others is inexcusable.”
According to BrokerCheck, in August, the Securities and Exchange Commission barred Wimmer from acting as a broker or investment adviser or otherwise associating with firms that sell securities or provide investment advice to the public. FINRA also barred Wimmer from acting as a broker or otherwise associating with a broker-dealer firm.
Advisor Convicted of Burglary, Stalking Faces Interim Suspension of CFP Mark
The Certified Financial Planner Board of Standards imposed an automatic interim suspension of Raymond Erker’s CFP certification, which was effective Sept. 28.
The board received evidence that Erker was convicted by a jury in Ohio of two felonies: burglary and menacing by stalking.
According to the CFP database and LinkedIn, Erker was CEO of SageGuard Wealth Management. SageGuard’s website is no longer licensed. As of Oct. 5, Erker is still registered with the SEC as an investment adviser representative.
Prior to SageGuard, Erker had been registered as a broker and worked at firms like LPL Financial — where he was discharged for borrowing money from a customer without following firm policy — and Merrill Lynch, according to BrokerCheck.
Pursuant to CFP Board’s Disciplinary Rules and Procedures, “[a]n interim suspension shall immediately be issued without a hearing when CFP Board Counsel receives evidence of a conviction … felony conviction for any crime.”
