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Regulation and Compliance > Litigation

Ex-MassMutual Broker Pleads Guilty to Defrauding Clients

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What You Need to Know

  • A barred broker pleaded guilty to two counts of wire fraud and one count of making a false statement to the IRS.
  • The ex-MassMutual broker faces a maximum of 45 years in prison when he is sentenced.
  • He used a client's money to run his firm and for personal expenses including travel.

A barred broker who used a client’s funds to pay for his own business’s operating expenses and his own personal expenses pleaded guilty on Thursday to two counts of wire fraud and one count of making a false statement to the Internal Revenue Service, according to court documents and Damian Williams, the U.S. attorney for the Southern District of New York.

The charges related to separate schemes to defraud clients and to fail to pay contributions made by his firm’s employees to the company 401(k) plan.

Adam Belardino, 37, of Manhattan faces a maximum sentence of 45 years in prison. Each count of wire fraud carries a maximum sentence of 20 years, while the one count of making a false statement to the IRS carries a maximum sentence of five years, Williams said in a news release.

Belardino will be sentenced by Judge Kenneth M. Karas. A sentencing date wasn’t provided.

Belardino is the CEO of the Maddox Group, a New York City financial services firm he founded in or about July 2019, according to an indictment filed against him April 21 in U.S. District Court for the Southern District of New York.

From March 2017 to April 2019, Belardino was registered as a broker with MassMutual Investors Services. But the company terminated him “in connection with investigation into a customer complaint,” according to a disclosure on his report on the Financial Industry Regulatory Authority’s BrokerCheck website.

MassMutual did not immediately respond to a request for comment on Monday.

Client Funds Used for Travel

Belardino had managed the investments of “Victim 1” at “another firm” before he founded Maddox, according to court documents and Williams. The name of the other firm wasn’t provided in the court documents or by Williams. But it was MassMutual, according to BrokerCheck.

The client’s name also wasn’t given. But the court documents said she was a 64-year-old resident of New Rochelle, New York, as of September 2021.

In August 2019, Belardino persuaded Victim 1 to liquidate some of her portfolio and to transfer the liquidated funds to Maddox for investment. The client then transferred more than $313,000 to Maddox in eight separate transactions between August 2019 and October 2020, according to court documents and Williams.

Instead of investing Victim 1’s money as promised, Belardino used her money to pay the operating expenses of Maddox, including payroll and office rent; to pay down prior debt; to pay credit card charges, consisting mainly of personal items; and to pay for personal travel, according to court documents and Williams.

In September 2021, Victim 1 directed Belardino to transfer her portfolio at Maddox to her brokerage account at another firm. From September 2021 to February 2022, Bernardino told the victim and her family members he was liquidating the portfolio and would return the funds soon.

He also provided documents suggesting he made a wire transfer of Victim 1’s funds to her bank and deposited checks drawn on a checking account held by Maddox into Victim 1’s bank account for what he claimed was the full value of her portfolio. But Victim 1 never received any funds by wire, and the checks Belardino deposited were returned because of insufficient funds in Maddox’s account.

2 Other Schemes

Belardino also defrauded a second client through a life insurance policy scheme. And, as part of a retirement plan scheme, from on or about Nov. 1, 2020, through on or about Aug. 13, 2021, Belardino withheld $8,005 from the paychecks of four Maddox employees other than himself who chose to participate in a plan of which he served as trustee.

He failed to deposit those withheld funds into the plan’s trust account and instead converted those funds to his own and Maddox’s use, according to court documents and Williams.

On or about Oct. 14, 2021, Belardino authorized the plan administrator to file with the IRS a Form 5500-SF for the 2020 calendar year in which he falsely answered in the negative when asked “During [2020]:  Was there a failure to transmit to the plan any participant contributions…?”

(Image: Adobe Stock)


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