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Regulation and Compliance > Litigation

Judge Awards $900K to Eye Doctor Bilked by ex-Wells Fargo Advisor

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What You Need to Know

  • The former rep was arrested in October in the theft of over $2.86 million from five clients.
  • He used the funds to pay for his gambling and personal expenses, including luxury gifts, DOJ alleged.
  • The eye doctor says the rep took nearly $900,000 of her money and then bought a house.

A New Jersey Superior Court judge has awarded $909,000 to one of the victims of the former Wells Fargo broker who was arrested in October and charged with stealing over $2.86 million from five clients to pay for personal expenses.

One of those clients, eye doctor Kenette Sohmer, filed a separate civil suit against ex-Wells Fargo rep Kenneth A. Welsh and his wife, Monica Welsh, on Aug. 26, in New Jersey Superior Court.

Sohmer alleged in the complaint that while serving as Sohmer’s advisor, the now-former wirehouse broker withdrew almost $1.9 million without authorization from a brokerage account she maintained at Wells Fargo and transferred the funds to recipients unknown to her in 76 transactions from December 2018 through March 2021.

Sohmer alleged that nearly $250,000 had been withdrawn from an IRA she maintained at Wells Fargo in eight transactions from January through August 2020, also without authorization.

The complaint also alleged that, on May 1, 2019, Guardian Title Services acted as closing agent on the defendants’ $900,000 purchase of a home in River Edge, New Jersey.

On or about April 30, 2019, the defendants converted to their own use $898,000 of the plaintiff’s money, according to the complaint. As a result of that conversion of the plaintiff’s property, Sohmer was “damaged in the amount of not less than $898,000,” she alleged.

Judge’s Decision

On Feb. 4, Judge Lisa Perez Friscia granted $909,000 to Sohmer and the plaintiff’s motion requesting that a constructive trust be imposed on the defendants’ River Edge home.

Friscia, however, denied the plaintiff’s motion to transfer possession of that property to her for the purpose of selling it.

Welsh’s attorney did not immediately respond to a request for comment on Tuesday.

Fraud Charges

Welsh was arrested and charged by complaint in October in U.S. District Court for the District of New Jersey with four counts of wire fraud and one count of investment advisor fraud by the  Department of Justice.

The Securities and Exchange Commission filed a separate complaint against Welsh in the same court over the same scheme.

Welsh used the unlawfully obtained funds to pay for his gambling and to “fund extravagant personal expenses, including luxury gifts and items,” according to the DOJ complaint. Some of the funds were used to pay for gold or coins, the complaint alleged.

If found guilty on all counts, Welsh faces a maximum prison sentence of 85 years, Rachael A. Honig, the acting U.S. attorney for the District of New Jersey, said in October.

Each of the wire fraud counts carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greater.

The investment advisor fraud count carries a maximum potential penalty of five years in prison and a $10,000 fine, or twice the gross gain or loss from the offense, whichever is greater, Honig said.

Wells Fargo Termination

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.

“At Wells Fargo we hold our employees to the highest ethical standards,” a Wells Fargo spokeswoman told ThinkAdvisor on Tuesday. “We notified regulators and law enforcement of this matter and the financial advisor was terminated.”

(Photo: Shutterstock)


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