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Regulation and Compliance > Litigation

Ex-LPL Broker Faces Up to 20 Years in Prison for Raiding Clients' Annuities

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What You Need to Know

  • The ex-LPL broker allegedly defrauded older clients and stole funds from their annuities.
  • Instead of investing his clients' money, he allegedly used the funds for his personal and business expenses.
  • He was charged with 3 counts of wire fraud and 1 count each of mail fraud and aggravated identity theft.

A former LPL Financial broker was arrested and charged Wednesday with defrauding his older clients and stealing their retirement assets, according to court documents and a statement jointly released by Nathaniel R. Mendell, acting U.S. attorney, and Joseph R. Bonavolonta, special agent in charge of the FBI, Boston Division.

Paul R. McGonigle, 65, of Middleboro, Massachusetts, was charged with three counts of wire fraud, one count of mail fraud and one count of aggravated identity theft. He appeared before U.S. District Court Magistrate Judge Donald L. Cabell in U.S. District Court for the District of Massachusetts on Wednesday and faces about 20 years in prison if convicted.

According to an indictment against McGonigle filed at the court Tuesday, he was a financial advisor for the four clients who wound up being victims of his alleged crimes.

McGonigle was a registered broker with LPL from 2018-2019 after time with five other firms over the course of his 34-year career in the industry, according to Financial Industry Regulatory Authority’s BrokerCheck. There was no disclosure on his report stating why he left LPL.

LPL terminated McGonigle in early June 2019, is “cooperating with regulators and our investigation is underway,” a company spokesperson told ThinkAdvisor on Thursday. The firm didn’t say why it terminated him.

FINRA barred McGonigle from associating with all FINRA member firms in any capacity after he failed to respond to its request for information as part of an investigation it was conducting. FINRA sent him a notice of suspension letter dated Aug. 12, 2020.

Starting in July 2018, McGonigle allegedly caused unauthorized withdrawals from his victims’ annuities and induced the clients to give him money to invest on their behalf, which he then used for personal and business expenses instead, according to court documents and the Justice Department.

To carry out his scheme, McGonigle allegedly posed as clients on calls with their annuity firms and signed their names on forms requesting withdrawals from their annuities.

The charges of mail and wire fraud provide for a sentence of up to 20 years in prison, three years of supervised release and a fine of up to $250,000, or twice the gross gain or loss from the offense, whichever is greater, according to the DOJ.

The charge of aggravated identity theft provides for a mandatory consecutive sentence of two years in prison, up to one year of supervised release and a fine of $250,000, or twice the gross gain or loss from the offense, whichever is greater.

A continuance in the case was granted by Cabell on Thursday to provide the parties additional time to work on their discovery plans and for the defendant to consider the need for pretrial motions, according to a court order. They were given until July 29.

(Photo: Shutterstock)