Barred Broker Sentenced to 5 Years for Fraud That Shuttered Life Insurance Firm
The ex-broker scammed a life insurance company that was his client, leading it to be forced into liquidation.
A barred broker was sentenced on Thursday to five years in prison for his role in a scheme to defraud a North Carolina-based life insurance company, according to the Justice Department and court documents.
Bradley C. Reifler, 62, of New York caused about $20 million in losses to the company, which led to it being ordered into liquidation, Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division and Eric Shen, inspector in charge of the U.S. Postal Inspection Service Criminal Investigations Group, said in a news release.
The firm was North Carolina Mutual Life Insurance Co., according to court documents filed in related cases. The company, started in 1898, was the oldest black-owned insurance company in the U.S., according to Insurance Journal.
According to the Justice Department’s Dec. 1, 2020 indictment against Reifler in U.S. District Court for the Middle District of North Carolina and other court documents, the CEO and founder of Forefront Capital Holdings was responsible for investing about $34 million of the insurance company’s assets based on guidelines contained in a trust agreement and investment advisor agreement.
However, instead of investing the assets in secure investment vehicles as required by the agreements, Reifler misappropriated the funds for the benefit of his own companies and then used the funds for improper purposes, according to the Justice Department.
As examples, he used the funds to pay for Forefront overhead expenses and repaying prior investors to whom he owed money, the Justice Department said. Reifler also diverted other funds to risky investment vehicles that did not comply with the investment guidelines.
Additionally, during internal and external audits performed in 2016, Reifler sent the life insurance company fabricated documentation for deals with individuals and entities that didn’t exist, according to the Justice Department.
As a result of Reifler’s fraud, the life insurance company was able to recoup only a portion of the $34 million or so that it entrusted to Reifler, the Justice Department said. Reifler pleaded guilty in May 2022 to wire fraud.
Reifler was with seven Financial Industry Regulatory Authority-affiliated financial firms over the course of a 27-year career, according to his report on FINRA’s BrokerCheck website. The last of those firms was Wilmington Capital Securities, where he was registered as a broker from September to December 2015.
He was later barred from the sector by FINRA after he appeared for testimony in a FINRA hearing but “refused to answer many questions asked by FINRA relating to his involvement in [a] closed-end mutual fund and the use of the closed-end mutual fund investors’ money,” according to one of seven disclosures on his report.
The Securities and Exchange Commission also filed a complaint against him March 12, 2020, in U.S. District Court for the District of Nevada, alleging he defrauded a Nevada-chartered trust company of $6 million and served as the trustee to a reinsurance trust (for whom Reifler served as investment advisor), which lost about $26.5 million “as a result of Reifler’s misconduct.”
The reinsurance trust held the assets for the benefit of a North Carolina life insurance company, the SEC said, referring to the North Carolina Mutual Life Insurance Co.
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