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January 04, 2019 at 10:36 AM
A former Wells Fargo broker was indicted on 128 felony counts related to securities fraud from his work as a financial advisor.
According to a the prosecuting attorney of Montgomery County, Ohio, John Greg Schmidt stole money from investment accounts in order to cover for stolen money in other investor’s accounts — a Ponzi scheme.
The Montgomery County Grand Jury indicted Schmidt on 124 counts of forgery; two counts of theft from an elderly or disabled adult of more than $150,000; one count of telecommunications fraud over $150,000 but under $1 million; and one count of fraud or deceit by investment advisor of more than $150,000.
According to Prosecuting Attorney Mat Heck Jr., Schmidt created and falsified financial statements to investors in an effort to cover for the missing investments. Schmidt also sold securities without the knowledge or authorization of the investors and the defendant received commissions on those transactions of nearly $250,000.
“For years, this defendant defrauded a number of investors, many of them elderly or with dementia. He had to keep stealing from more investors in order to cover for the thefts from other investors,” Heck said in a statement.
A federal civil lawsuit has also been filed by the Securities and Exchange Commission. The SEC brought charges against Schmidt in September.
According to the SEC’s complaint, Schmidt sold securities of at least seven of his customers and secretly transferred more than $1 million in proceeds to 10 other customers to cover shortfalls in their accounts.
“From at least 2003 through 2017, Schmidt betrayed his customers’ trust by perpetrating a classic fraudulent scheme: He robbed Peter to pay Paul,” the complaint states.
Schmidt, who operated Schmidt Investment Strategies Group in Ohio, was employed by Wells Fargo for 10 years until he was discharged from the firm in late October 2017, according to BrokerCheck. In addition, the Financial Industry Regulatory Authority barred Schmidt from association with any FINRA member in any capacity as of March 2018.
Wells Fargo said in a statement that the firm holds “all advisors to the highest ethical standards.”
“We fully cooperated with all regulatory and law enforcement investigations regarding this formerly affiliated advisor,” according to the bank.
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