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Regulation and Compliance > Litigation

Ex-LPL, Wells Rep Stole $500K, Gambled With Client Money, Prosecutor Says

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What You Need to Know

  • The barred broker faces a maximum of 65 years in prison for stealing over $500,000 from clients.
  • Instead of investing his clients' money, he used the funds for gambling and his own personal expenses, DOJ said.
  • The SEC, in a separate complaint, said the ex-broker stole at least $680,000 from clients, including older and disabled investors.

A former broker and advisor who served as a registered representative for LPL Financial and Wells Fargo could face a maximum of 65 years in prison after he was arrested Monday for allegedly stealing more than $500,000 from multiple clients at both firms to fund his gambling and personal expenses, according to Philip R. Sellinger, U.S. Attorney for the District of New Jersey.

Mario E. Rivero Jr., 38, of Red Bank, New Jersey, was charged by complaint in U.S. District Court for the District of New Jersey with two counts of wire fraud, one count of investment advisor fraud, and one count of securities fraud.

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 greatest, according to Sellinger.

The 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. The securities fraud count carries a maximum penalty of 20 years in prison and a $5 million fine, Sellinger said in a news release.

Instead of investing his clients’ funds as promised, Rivero allegedly perpetrated a scheme to defraud multiple clients by unlawfully diverting the funds to enrich himself and others, Sellinger alleged.

Rivero was arrested at his home and was to appear before U.S. Magistrate Judge Michael A. Hammer, according to Sellinger.

According to documents filed in the Justice Department’s case and statements made in court, from April 2018 through November 2020, Rivero, while serving in his capacity as an advisor for a large brokerage firm, misappropriated at least $529,870 from four clients.

The complaint and Sellinger did not name the firm. But Rivero was a rep for Wells Fargo from October 2010 until September 2020 and a rep for LPL from October 2020 until June 2021, according to his report on the Financial Industry Regulatory Authority’s BrokerCheck website.

In May 2021, Rivero signed a FINRA letter of acceptance, waiver and consent in which he, without admitting to or denying FINRA’s findings, consented to be barred from associating with any FINRA member firm in any capacity. FINRA signed the letter in June 2021.

FINRA barred him after he “refused to provide information and documents requested by FINRA,” according to the AWC letter. Not cooperating with a FINRA investigation is a surefire way for any broker to be barred by the industry self-regulator, which had been investigating Rivero because he was terminated from Wells Fargo.

On Oct. 1, 2020, Wells Fargo filed a Form U5 Uniform Termination Notice stating that Rivero had voluntarily resigned, according to the AWC letter. On April 22, 2021, Wells Fargo filed an amended Form U5 stating it had initiated an internal review concerning allegations made by two former customers of Rivero.

Rivero’s actions violated FINRA Rules 8210 and 2010, FINRA said.

“At Wells Fargo we hold our employees to the highest ethical standards,” a spokeswoman for the wirehouse told ThinkAdvisor on Tuesday. “Wells Fargo brought Mr. Rivero’s conduct to the attention of regulators and law enforcement, and we are reimbursing clients.”

LPL did not immediately respond to a request for comment.

Separate SEC Complaint

In a separate complaint filed by the Securities and Exchange Commission on Monday in the same New Jersey court, the SEC alleged Rivero “fraudulently misappropriated at least $680,000 from investment accounts that he handled, including accounts owned by elderly and/or disabled investors” from about May 2010 to September 2020.

Between at least July 2018 and November 2020, Rivero persuaded at least five of his clients at one of the two firms, “some of whom” were more than 80 years old and/or disabled, “to transfer funds from their investment accounts at Financial Institution A to their own bank accounts and then, from their bank accounts, to entities that Rivero was secretly associated with,” according to the complaint.

(Photo: Adobe Stock)