Ex-Schwab Rep Who Bilked His Dad, Other Clients Gets 16-Plus Years in Prison

A former registered broker and advisor who served as a rep for Charles Schwab has been sentenced to a minimum of 16 years, 3 months and a maximum of 22 years, 5 months in prison for a scam in which he targeted retirees including his own father, according to the North Carolina Department of the Secretary of State.

The 12 victims of Russell Joseph Mutter lost over $3.3 million between January 2009 and December 2017, according to the findings of a multi-year investigation led by law enforcement agents with the North Carolina Secretary of State’s Securities Division, with the assistance of the U.S. Postal Inspection Service.

Mutter was charged with 41 counts of investment advisor fraud, financial exploitation of an older adult and obtaining property by false pretenses. He pleaded guilty and was sentenced Tuesday by Forsyth County Superior Court Judge David Hall, who consolidated the charges into three Class C felony counts for sentencing purposes.

Mutter was sentenced to a minimum of 65 months and a maximum of 90 months for each of the three counts, with the sentences to be served consecutively. He will get credit toward the sentence for the time he has served since his arrest.

The 12 victims were defrauded in Forsyth County and outside of North Carolina by Mutter, who removed funds from his clients’ accounts without their authorization, invested some of his clients’ funds in high-risk securities without their knowledge, and misused their funds.

When the speculative investments he made failed, Mutter sought to hide the losses by fabricating fraudulent account statements.

Mutter was a rep for Schwab from November 1993 until November 1997 and then again from May 2000 until June 2009, according to his report on the Financial Industry Regulatory Authority’s BrokerCheck website.

Schwab was the last of the three firms he was registered with during his 14 years as a FINRA-affiliated rep. He registered his own advisory firm, RJM Financial, with the state of North Carolina in 2010.

“Schwab has built its reputation on seeing the world through clients’ eyes and keeping them at the center of all that we do,” a company spokesperson told ThinkAdvisor on Friday. “The individual in question has not been employed with Schwab for almost 13 years, since June of 2009.”

The Secretary of State’s Securities Division issued a temporary cease and desist order in February 2018, prohibiting Mutter from operating RJM Financial and issued a final order on April 17, 2018, permanently revoking his license to act as an investment advisor in North Carolina.

“Mr. Mutter utterly disregarded his fiduciary responsibility to act in his clients’ best interests,” North Carolina Secretary of State Elaine Marshall said in a statement. “He targeted retirees — including his own father — and instead of protecting their finances he misled them, used their faith against them to gain their trust, and ultimately created a Ponzi scheme to cover up his losses with funds from new investors while converting clients’ money for his personal use.”