Close Close
ThinkAdvisor

Regulation and Compliance > Litigation

Ex-LPL Rep Charged With Fraud, Could Get 37 Years Behind Bars

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

What You Need to Know

  • The former LPL broker is accused of raiding clients' annuities, the Justice Department says.
  • He was charged with one count of investment advisor fraud and two counts of money laundering in a superseding indictment that replaced an earlier one.
  • In August 2020, FINRA barred McGonigle from associating with any FINRA member firms.

A former LPL Financial broker who was barred from the industry by the Financial Industry Regulatory Authority has been indicted for defrauding at least 15 of his older clients and stealing their retirement assets, according to the Justice Department and court documents.

Paul R. McGonigle, 67, of Middleboro, Massachusetts, was charged on Tuesday in U.S. District Court in Massachusetts with one count of investment advisor fraud and two counts of money laundering in a superseding indictment that replaced an earlier indictment from last year.

He was previously arrested and charged in June 2021 with three counts of wire fraud, one count of mail fraud and one count of aggravated identity theft.

If he is found guilty, he may spend the rest of his life behind bars considering his age.  If found guilty of all the charges, he faces a maximum of 37 years in prison.

The charge of investment advisor fraud “provides for a sentence of up to five 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,” DOJ said.

“The charges of money laundering provide for a sentence of up to 10 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 DOJ.

The mail and wire fraud charges 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, DOJ said.

The aggravated identity theft charge calls 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, according to DOJ.

McGonigle was a broker for LPL from February 2018 until June 2019, according to his report on FINRA’s BrokerCheck website. Before that, he was a broker for SII Investments in New Bedford, Massachusetts, from July 1998 until February 2018. That firm announced the sale of the business of its independent broker-dealer network to LPL in 2017.

LPL did not immediately respond to a request for comment on Wednesday. Jane F. Peachy, a Boston federal public defender representing McGonigle, declined to comment.

In August 2020, FINRA barred McGonigle from associating with any FINRA member firms in any capacity, effective Nov. 16, 2020, after alleging he failed to respond to a request for information from the regulator.

Clients’ Funds Used for Himself

According to the new charging document and DOJ, McGonigle served as a financial advisor for the victims. Starting no later than February 2015 and through about May 2021, he allegedly caused unauthorized withdrawals from his clients’ annuities and induced them to give him money to invest on their behalf, which he then used instead for personal and business expenses.

To carry out the scheme, McGonigle allegedly posed as his clients on calls with their annuity companies and signed their names on forms requesting withdrawals from their annuities, according to the charging document and DOJ.

To avoid detection, he often misappropriated funds in the accounts of clients who were older or in poor physical and mental health, according to court documents.

Four of the five victims cited in the court documents were residents of Massachusetts, while the other was a resident of Florida, according to court documents, which added he converted at least $1.4 million from at least 15 clients in all.