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Regulation and Compliance > Federal Regulation > SEC

SEC Bars Ex-LPL Rep Who Pleaded Guilty to Witness Tampering  

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What You Need to Know

  • The SEC has barred an ex-LPL broker who was already barred by FINRA and sentenced to prison.
  • The ex-broker pleaded guilty last year to three counts of wire fraud and one count of aggravated identity theft.
  • But he scrapped the deal and was charged again for the same alleged crimes, this time with witness tampering added.

A former LPL Financial broker who recently pleaded guilty a second time to charges related to a scheme in which he allegedly stole over $2.8 million from six clients has now been barred from the industry by the Securities and Exchange Commission.

In an order filed Monday, the SEC said James K. Couture, 44, formerly of Sutton, Massachusetts, is “barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization.”

Couture is also barred from “participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock,” according to the SEC order.

LPL did not immediately respond to a request for comment on Tuesday.

Witness Tampering, Fraud, Identity Theft

Couture pleaded guilty last year to three counts of wire fraud and one count of aggravated identity theft, according to the U.S. Justice Department and court documents in U.S. District Court for the District of Massachusetts.

As part of a plea agreement, he was to serve 66 to 91 months in prison.

However, Couture decided about one month later to cancel a scheduled hearing and scrap the deal, according to a court filing on July 6, 2021.

Couture was initially charged in connection with the scheme in June 2021. However, after those initial charges were filed, he “engaged in witness tampering by creating fake documents purported to be for his clients’ accounts and providing false information to at least one victim in the case for approximately six months,” the Justice Department said in September.

As a result, Couture was “subsequently charged with witness tampering in connection with his efforts to deceive” that victim on Jan. 14, 2022, according to the Justice Department. Consequently, he now faces a longer prison sentence.

In September, Couture pleaded guilty to one count of witness tampering, four counts of wire fraud, four counts of aggravated identity theft and one count of investment advisor fraud.

The charge of witness tampering provides for a sentence of up to 20 years in prison, three years of supervised release and a fine of $250,000, according to the Justice Department.

Each charge of wire fraud provides for a sentence of up to 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater, the Justice Department noted.

The charge of investment advisor fraud provides for a sentence of up to five years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. And the charges of aggravated identity theft each provide for a mandatory consecutive term of two years in prison.

U.S. District Judge Nathaniel M. Gorton scheduled sentencing for Jan. 11, 2023, at 3 p.m. in U.S. District Court for the District of Massachusetts.

8 Disclosures in Over 18 Years

Couture was a broker for LPL from 2009 to 2020, according to his report on the Financial Industry Regulatory Authority’s BrokerCheck website.

Couture also founded his own firm, The Private Wealth Management Group, in 2010, with offices in Springfield and Worcester, Massachusetts.

LPL terminated Couture on June 17, 2020, after he allegedly altered identifying information, account balances and distributions in a customer account statement, maintained commingled customer funds and used an unapproved email address, according to one of eight disclosures on his report, most of which were client complaints alleging misappropriation of their funds.

Without admitting or denying FINRA’s findings from an investigation into his actions, Couture signed a FINRA letter of acceptance, waiver and consent on Oct. 16, 2020, in which he agreed to be barred from associating with any FINRA member in any capacity.

Imaginary Mutual Funds

In its initial action, the Justice Department pointed out that Couture also started a firm called Legacy Financial Group in New Hampshire in or about September 2009 and operated a third-party administrator of retirement plans that managed the retirement plan of a law firm based in Worcester.

From about 2009 to 2020, Couture misappropriated about $2.8 million from his clients by transferring funds out of his clients’ accounts, investing it in fictitious mutual funds and then selling other clients’ holdings to pay investment returns, according to the charges filed against him.

As part of the scheme, Couture forged clients’ signatures on documents, or caused clients to sign documents by falsely representing that the proceeds of transactions would be used for their benefit, the Justice Department said.

In a parallel action that the SEC filed against Couture on the same date as the initial Justice Department action, the SEC also alleged he defrauded his advisory clients.

(Photo: Diego M. Radzinschi/ALM)


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