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Ex-Broker Who Defrauded Older Clients Sentenced to Over 5 Years in Prison

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What You Need to Know

  • The ex-Mutual of Omaha broker was sentenced to 63 months for defrauding mostly older clients out of $2.6 million.
  • The former rep was also ordered to pay his 27 victims restitution of $2.4 million.
  • Separately, a partial judgment was entered against an ex-LPL broker who the SEC alleged stole hundreds of thousands of dollars from an older client.

The former Mutual of Omaha Investor Services broker who the Securities and Exchange Commission last year charged with defrauding older clients out of $2.4 million has now been sentenced in a parallel criminal case to more than five years in prison.

On May 20 in U.S. District Court for the Eastern District of Wisconsin, Edward Matthes was sentenced to 63 months in federal prison for carrying out a $2.6 million investment scheme that defrauded 27 victims, most of whom were seniors, according to court documents and Richard G. Frohling, acting U.S. Attorney of the Eastern District of Wisconsin.

Matthes was also ordered to pay his victims restitution of $2.4 million. He had earlier pleaded guilty to three counts of wire fraud.

Mutual of Omaha did not immediately respond to a request for comment about the sentencing on Thursday.

According to the separate SEC complaint filed against him in the same court last year, beginning in April 2013, Matthes started stealing from certain retail brokerage clients, three of whom were also his investment advisory clients, and misappropriated about $2.4 million from 26 of his clients between April 2013 and March 2019.

“The SEC’s litigation against Matthes is ongoing,” it said on Wednesday.

Matthes was registered with Mutual of Omaha as a broker from 2012-2019, according to his report on the Financial Industry Regulatory Authority’s BrokerCheck website.

He was terminated from the firm on March 12, 2019, for allegedly “creating fictitious account statements and diverting customer funds for his own personal use,” according to a disclosure on his report. FINRA barred Matthes from associating with any FINRA member firm in any capacity later that same month. He is no longer registered as a broker or advisor, according to BrokerCheck.

After the SEC complaint was filed against him in January 2020, Matthew D. Krueger, the U.S. Attorney for the Eastern District of Wisconsin at the time, filed criminal charges against Matthes on Nov. 25.

Update on Ex-LPL Broker

Separately, the SEC said Wednesday that the U.S. District Court for the District of Connecticut entered a partial judgment against the ex-LPL Financial broker who the SEC had alleged stole hundreds of thousands of dollars from a retired 73-year-old client by liquidating securities in her investment accounts and transferring the proceeds to a bank account held jointly with the client.

The SEC’s complaint, filed on Sept. 1, 2020, charged Matthew O. Clason with violating the antifraud provisions of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.

Clason consented to the partial judgment entered by the court, which enjoins him from violating the above statutes, the SEC said. “Any disgorgement or civil penalty in the SEC matter will be determined by the court at a later date,” it noted.

In a parallel criminal action brought by the U.S. Attorney’s Office for the District of Connecticut, Clason admitted to stealing more than $600,000 from an elderly client and pleaded guilty on May 12 to one count of wire fraud.

Clason is scheduled to be sentenced on Aug. 5, according to Leonard C. Boyle, acting U.S. attorney for the District of Connecticut. Clason faces a maximum term of 20 years in prison.

Clason was a registered broker for LPL from 2016-2020, according to his BrokerCheck report. LPL discharged Clason Aug. 19. 2020, alleging he “maintained joint bank account with Firm customer, engaged in liquidations of securities in customer’s Firm account, transferred funds to joint bank account, and withdrew funds,” according to a disclosure on his report.

LPL did not immediately respond to a request for comment on Thursday.

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