Close Close
ThinkAdvisor

Regulation and Compliance > Litigation

Ex-Advisor Pleads Guilty to Role in $9.3M Ponzi Scheme

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

What You Need to Know

  • The ex-advisor pleaded guilty to one count of conspiracy to commit mail and wire fraud, two counts of mail fraud and three counts of wire fraud.
  • Sentencing is set for May 5.
  • If found guilty, she faces a maximum possible sentence of 20 years for each count.

A former licensed investment advisor pleaded guilty in U.S. District Court for the Northern District of Ohio on Thursday for her role in an investment scheme that defrauded clients out of about $9.3 million, according to court documents and Bridget M. Brennan, U.S. attorney for the Northern District of Ohio.

Tara M. Brunst, 47, of Olmsted Falls, Ohio, pleaded guilty to one count of conspiracy to commit mail and wire fraud, two counts of mail fraud and three counts of wire fraud, Brennan said.

Sentencing is set for May 5, according to Daniel Ball, a spokesman for Brennan. “The max possible sentence for each count is 20 years,” he told ThinkAdvisor on Friday.

Brunst was employed as an advisor for co-defendant Raymond A. Erker in Westlake, Ohio. Brunst and Erker, 50, of Avon, along with Kevin M. Krantz, 56, of Olmsted Falls, were indicted in September 2020.

Starting in January 2013 and continuing through January 2018, court records state that Brunst and her alleged co-conspirators schemed to steal from investors.

As part of the scheme, members of the conspiracy sold to clients investments they misrepresented as annuities and senior secured notes with no risk of loss and with a guaranteed rate of return, according to court documents. Without the approval or consent of investors, investor funds were diverted to other entities the three controlled and their personal bank accounts.

More on this topic

Court documents state that to keep up with promised rates of return, Brunst and her alleged co-conspirators falsely represented that payments to previous investors were rates of return and interest when the payments were actually new investor funds, the trademark element of a Ponzi scheme, Brennan noted in announcing Brunst’s plea.

Brunst and her alleged co-conspirators also failed to disclose to investors they had substantial or limited ownership interests in companies receiving investments from the scheme, according to the indictment.

To avoid detection, members of the conspiracy allegedly set up office fronts in Delaware and Nevada, contracted with call centers and created false websites and account statements that purported to show investor account balances.

The cases against Erker and Krantz “remain ongoing,” according to Brennan.

(Photo: Shutterstock)