A former investment advisor whose firm was acquired by Wealth Enhancement Group in late 2021 was sentenced this week to over 10 years in federal prison for stealing about $2.25 million from elderly clients, including some that were receiving end-of-life care, and using the funds to buy properties and luxury vehicles for herself, the Justice Department announced.
Julie Anne Darrah, 52, of Santa Maria, California, was sentenced Monday to 121 moths in prison by U.S. District Judge Otis D. Wright II, according to the U.S. attorney's office for the Central District of California. She had pleaded guilty on March 4 to one wire fraud count. The judge will schedule a restitution hearing later.
Darrah stole the funds from clients from roughly November 2016 to July 2023 by obtaining control of their assets and then — without the victims’ knowledge or consent — liquidating their security holdings and transferring the proceeds to accounts she controlled, prosecutors said.
Darrah persuaded victims to sign documents making her the trustee of their trusts or a signatory on their bank accounts or giving her power of attorney over their brokerage accounts and allowing her, as their investment advisor, to transfer funds from their accounts to other bank accounts, including her own, according to the U.S. attorney.
"Darrah took advantage of trust victims placed in her — often convincing them she would take care of them in their older years like a daughter, and she used this trust to convince them to sign the documents that she then used to steal money from them," the U.S. attorney's office said in a statement.
Darrah "used stolen funds to buy properties for herself, pay other personal expenses, buy luxury vehicles and operate other business ventures," prosecutors said. "Some victims were left in desperate circumstances, without the money to pay for end-of-life care, when the fraud was discovered."
Darrah also persuaded a company identified in the plea agreement as “Business Victim 1,” a Minnesota-based investment advisory firm, to acquire her firm, Vivid Financial Management Inc., based on false and misleading statements and concealment of material facts, including not telling that firm about her theft of client funds. After the fraud was discovered, the Minnesota firm incurred approximately $5.4 million in losses, prosecutors said.
The Securities and Exchange Commission filed a civil complaint against Darrah in October 2023 in connection with the scheme. In December last year, U.S. District Judge Dale S. Fischer found Darrah liable to pay over $2.4 million, including interest, in that case.
Also in December, a U.S district judge in Minnesota approved a settlement in a civil case under which Darrah must pay Wealth Enhancement Group $7 million. WEG's complaint against Darrah contended, among other points, that she had established herself as a business leader and wealthy patron in tight-knit, rural Orcutt, California, where she also led the local senior center.
"While we cannot comment on the criminal case, we acted swiftly to terminate Darrah's employment and protect our clients after learning of her misconduct in 2023. We have fully cooperated with law enforcement agencies in their review of this matter. Wealth Enhancement holds our entire team to the highest professional and ethical standards and we do not tolerate anything less," a Wealth Enhancement spokesperson told ThinkAdvisor by email Thursday.
The SEC complaint alleged Darrah primarily targeted elderly female advisory clients, many of whom had come to rely on Darrah for their financial well-being, including one client who lived in a memory care facility. She misappropriated funds from at least nine clients, according to the commission.
The FBI and the Federal Deposit Insurance Corporation Office of Inspector General investigated this matter. Assistant U.S. Attorney Kerry L. Quinn of the Major Frauds Section prosecuted the case.
Darrah's Financial Industry Regulatory Authority BrokerCheck record indicates she was registered through Mutual Securities for nearly eight years, from 2013 to 2022. Wealth Enhancement Advisory Services fired her in September 2023 "during an internal review for fraud, wrongful/unauthorized taking of client property, and for violations of investment-related securities law," among other reasons, including failure to cooperate with the firm's internal review, FINRA says.
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