Close Close
ThinkAdvisor

Regulation and Compliance > State Regulation

Bogus Broker Pleads Guilty to Securities Fraud, Faces Up to 25 Years in Prison

X
Your article was successfully shared with the contacts you provided.

What You Need to Know

  • A man posing as a broker from two different firms scammed at least 19 investors out of more than $2.7 million, prosecutors say.
  • He misappropriated more than $500,000 of the investors’ funds and lost most of the remaining funds trading securities.
  • A sentencing hearing is scheduled for March 23, 2022.

A bogus broker who scammed at least 19 investors out of more than $2.7 million now faces up to 25 years in prison after pleading guilty to securities fraud, according to Andrew Birge, U.S. attorney for the Western District of Michigan.

Joshua Louis Rupp, 37, previously of West Olive, Michigan, misappropriated more than $500,000 of the investors’ funds on personal expenses that included electronics, groceries and vacations, and lost most of the remaining funds trading securities, Birge had alleged.

Rupp pleaded guilty before Sally J. Berens, U.S. magistrate judge. As part of the plea agreement, Rupp agreed to pay full restitution of about $2.7 million to the victims of his crime, according to the plea agreement he signed Oct. 11, a court filing shows.

Rupp faces up to 25 years in prison when he is sentenced next year by Hala Y. Jarbou, U.S. district judge, Birge said Friday. In addition, he could face up to five years of supervised release; a $250,000 fine or the greater of twice the gross gain or gross loss; and a mandatory $100 special assessment.

A sentencing hearing is scheduled for March 23 at the court, in Lansing, Michigan, according to a court filing on Monday.

Lucas X. Dillon, a Lansing attorney who represented Rupp in the case, did not immediately respond to a request for comment on Wednesday.

According to the plea agreement and felony information, from 2015 to 2019, Rupp recruited investors by posing as a licensed broker or trader who worked at one of two different brokerage firms. The companies were not identified.

More on this topic

Rupp told investors he worked under the supervision of fictitious people at those firms, one of whom he claimed was his uncle, according to court documents. Rupp also told investors that the principal of their investments could not be lost for several reasons, including his choice of investments, trading strategy and insurance.

As part of his elaborate scheme, Rupp fabricated documents, including false account statements, a fraudulent securities license, and business documents bearing the logos of the firms he claimed to work for, according to the court documents. Some of the documents stated he had passed a securities trader qualification exam or that he was registered with the State of Michigan, according to the court documents.

However, those claims and others he made to induce and retain investments were false, according to the court documents.

The Securities and Exchange Commission filed a civil complaint against Rupp on July 28, 2021, in U.S. District Court for the Western District of Michigan, Southern Division, related to some of the same conduct charged in the DOJ’s felony information. That case was stayed on the U.S. Attorney’s Office’s motion pending entry of final judgment in the criminal matter, according to Birge.

“Securities trading is a risky business, and for good reason the professionals who do it are licensed and specially trained,” according to Birge. “This defendant misrepresented his qualifications to trade on behalf of investors in order to obtain money, lied about the performance of their investments, and misappropriated significant portions of the investments for his own personal gain,” he said in a statement.

It was possible that Rupp defrauded additional victims who had not yet come forward, Birge noted.