What You Need to Know
- A former Wells Fargo broker used clients' money to gamble and buy luxury items, DOJ alleged.
- The SEC filed a separate complaint against him in New Jersey on Thursday.
- If found guilty on all four counts of wire fraud and one count of advisor fraud, he faces a maximum prison sentence of 85 years.
A former Wells Fargo broker and investment advisor was arrested Thursday for allegedly stealing over $2.86 million from five clients to pay for personal expenses, according to Rachael A. Honig, the acting U.S. attorney for the District of New Jersey.
Kenneth A. Welsh, of River Edge, New Jersey, was charged by complaint in U.S. District Court for the District of New Jersey with four counts of wire fraud and one count of investment advisor fraud.
The Securities and Exchange Commission filed a separate complaint against Welsh in the same court Thursday over the same scheme.
Welsh was arrested Thursday at his home and was scheduled to appear by videoconference Thursday afternoon before U.S. Magistrate Judge Leda Dunn Wettre, Honig said.
Welsh was a registered broker with Wells Fargo from September 2012 until he was terminated by the firm June 17, according to his report on the Financial Industry Regulatory Authority’s BrokerCheck website. “Allegations were made that Mr. Welsh may have misappropriated funds from Wells Fargo Clearing Services, LLC clients,” according to a disclosure on his report.
In a statement provided to ThinkAdvisor on Thursday, the wirehouse said: “At Wells Fargo we hold our employees to the highest ethical standards. We notified regulators of this matter, the financial advisor was terminated, and we are working directly with clients to reimburse them.”
Funds Used to Gamble, Buy Luxury Items
According to documents filed in the case and statements made in court, from July 2017 through March 2021, Welsh, “while serving in his capacity as an advisor employed by a large brokerage firm, misappropriated at least $2.86 million from five clients,” Honig said. As is usual in cases like this, Honig didn’t identify the firm by name in a news release or the complaint.