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Regulation and Compliance > Litigation

Fake Financial Advisor Gets 4.5 Years in Prison for Fraud

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What You Need to Know

  • The defendant had identified herself to clients as an advisor specializing in retirement planning.
  • But the SEC says she was never registered.
  • In addition to prison, she was sentenced to two years of supervised release and ordered to pay $3.1 million in restitution.

A federal judge sentenced an unregistered financial advisor to 54 months in prison for scamming several older clients out of more than $3 million, according to court documents.

In addition to 4.5 years in prison, Judge Manish S. Shah on June 1 sentenced Lucita Zamoras to two years of supervised release after completing her sentence and ordered her to pay restitution of $3.1 million and a special assessment of $100, due immediately.

“We are pleased with [the] sentence Ms. Zamoras received,” Sami Azhari, the Chicago attorney who represented her, told ThinkAdvisor by email on Tuesday.

“Judge Shah was very thoughtful in his decision, and considered her extensive mitigation despite the government’s argument that he disregard her gambling addiction,” Azhari added. “She is looking forward to rebuilding her life and doing everything she can to contribute towards her restitution requirement.”

Zamoras, who allegedly told investors she was a financial advisor who specialized in retirement planning, claimed their funds would be invested in safe, low-risk investments, according to the criminal information filed against her by U.S. Attorney John R. Lausch Jr. on Oct. 10, 2018, in U.S. District Court for the Northern District of Illinois.

Their money was instead used to pay for her gambling costs, personal expenses and to make Ponzi-type investments to earlier investors, according to Lausch. Those other expenses included payroll expenditures, credit card payments, airline tickets, car payments and utilities, the information stated.

Despite her claims, Zamoras “has not been registered with” the Securities and Exchange Commission in any capacity, according to an earlier complaint that the SEC filed against her in the same court on April 3, 2017.

In filing the 2018 information against Zamoras, Lausch said the defendant owned several companies in Niles, Illinois, including First Fidelity Financial Group, JQH Ventures and Cornerstone Home Solutions.

“Zamoras held herself out as a financial adviser specializing in retirement planning, and targeted elderly individuals, particularly immigrants,” according to the criminal information.

She tried to conceal her scheme by using newly raised investment funds to make Ponzi-type payments to earlier investors, the charge alleged. Zamoras intentionally failed to disclose those payments to the new and earlier investors, the information stated.

From 2009 until August 2018, Zamoras “defrauded at least a dozen investors out of approximately $2.5 million,” the information alleged, noting she was charged with one count of mail fraud, which was punishable by up to 20 years in prison.

The SEC had charged in its earlier complaint that, from at least October 2009 through December 2013, Zamoras engaged in a fraudulent scheme in which she raised about $727,049 from at least six investors by encouraging them to transfer their retirement accounts to self-directed individual retirement accounts and buy promissory notes issued by her.

Zamoras, originally from the Philippines, persuaded other Filipino investors to purchase the notes, which offered them 3.5%-5% annual interest.

(Image: Shutterstock)