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Regulation and Compliance > Litigation

Barred Advisor Charged With Bilking Veterans' Nonprofit

By Jeff Berman

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What You Need to Know

  • A barred advisor faces a maximum sentence of 20 years in federal prison for each of two counts of wire fraud.
  • Brian McQuade continued to identify himself as an advisor after being barred, the prosecutor says.
  • The $750,000 he allegedly took was instead spent for his personal benefit.

A federal grand jury returned an indictment charging a barred advisor with wire fraud related to a scheme to steal $750,000 from a nonprofit organization providing services to wounded military veterans.

The indictment against Brian McQuade, 70, of Chevy Chase, Maryland, was announced Monday by Jonathan F. Lenzner, acting U.S. attorney for the District of Maryland.

Although the two-count indictment was returned Sept. 2, it was sealed until Monday, after he was arrested. McQuade made an initial appearance Monday in U.S. District Court in Greenbelt, Maryland, before U.S. Magistrate Judge Charles B. Day.

If convicted, McQuade faces a maximum sentence of 20 years in federal prison for each of two counts of wire fraud, according to Lenzner.

Funds Used for Personal Benefit

“Between in or around June 2018 and continuing until at least in or around August 2021, McQuade devised and intended to devise a scheme and artifice to defraud” the nonprofit foundation, and “to obtain money and property from the Foundation by means of materially false and fraudulent pretenses, representations, and promises, with the intent to defraud and with knowledge of the scheme’s fraudulent nature,” according to the indictment.

McQuade allegedly claimed to be an investment advisor to clients, including the foundation, telling them falsely that he would manage investment accounts on their behalf, the indictment alleged.

He instead allegedly misappropriated clients’ funds, including the foundation’s $750,000, for his personal benefit, transferring the funds to personal accounts and spending the money on restaurants, country club dues, luxury car payments, mortgages and other items, according to the indictment.

The indictment alleged that McQuade represented to the foundation and its principals that he worked as an investment advisor at the firm Columbia Financial Advisors, which McQuade claimed was the investment advisory arm affiliated with an established accounting firm.

In reality, however, the indictment alleged that McQuade had not been formally affiliated with the accounting firm since at least 2015.

Columbia Financial and McQuade “failed to timely renew” their investment advisor and advisor representative registrations for 2017, according to a Feb. 16, 2017, disclosure on his report at the Securities and Exchange Commission’s website.

Despite that, he violated the Maryland Securities Act by continuing to engage in advisory activities, according to the disclosure, which added he also failed to amend Columbia’s Form ADV to disclose that its registration was denied by the state of Virginia.

The state of Maryland went on to bar McQuade and Columbia from the industry, fined them $20,000 and ordered them to cease and desist from continuing to engage in advisory activities and representing themselves as a registered advisor representative and advisor, according to a Dec. 5, 2017, disclosure.

To conceal his misappropriation of the foundation’s funds, McQuade allegedly continued to make misrepresentations to it about their investment — even providing it with a fabricated account statement, to create the false appearance that its funds were held in an investment account for its benefit.

To date, despite repeated requests, the foundation has not recovered any of its funds, according to the indictment.

Jeff Berman

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