Former financial advisor, Travis Wetzel, was sentenced to 3 ½ years in prison, three years of supervised release, and ordered to pay $1.2 million in restitution to a former client. Wetzel was first charged in May of last year with 24 counts of wire fraud and money laundering after he allegedly transferred money from a client's account into his own, without the knowledge or permission of the client. Over a 26 month span, Wetzel used his position as the branch manager at Research Financial Strategies to embezzle $1,282,224 from his client's annuity account.
After allegedly failing to supervise its representatives, the Financial Industry Regulatory Authority (FINRA) fined WFG Investments Inc. $700,000.00. FINRA stated that WFG had failed to supervise their representatives in six areas of supervision. FINRA also alleged a failure to conduct adequate due diligence with regard to the sale of private securities transactions, alternative investments, and other private placement offerings.
U.S. Capital Advisors, an investment advisory firm located in Houston, Texas, was ordered to pay a group of Exxon retirees $3.8 million in damages for implementing an unstable investment strategy. According to the Wall Street Journal, the retirees were falsely told that there savings was invested in a strategy which would protect them from market downturns. Despite this assurance, the retirees lost their savings. The arbitration panel awarded the retirees $1.9 million dollars in damages, nearly $1 million for legal fees, and punitive damages in the amount of $852,630.
Earlier this month, U.S. District Court Judge Gary Feinerman sentenced Oscar Overbey, Jr., to three and a half years in a federal prison. The charges against Overbey, a former Ameriprise advisor, stemmed from an alleged Ponzi scheme he created to pay off gambling debts and other personal expenses. Investigators believe that from 1996 through 2007, Overbey used his status as a financial advisor to embezzle about $4 million of his clients' money. This resulted in Overbey being barred from the financial industry in 2007 after he was terminated from Ameriprise in 2006. Ameriprise refunded all the clients who had lost money due to Overbey's actions. Overbey was also ordered to pay $3 million in restitution, which will reimburse Ameriprise. During the trial Overbey admitted that he met a lot of clients through his gambling and that, "The lines between my brokerage business and my gambling were often blurred." Once he completes his sentence, Overbey will then be placed on a three-year supervised probation, in which he will be prohibited from entering any casinos or participating in any gambling.
After receiving a fine of more than $1.3 million in 2010, Sherwin Brown was barred from the securities industry. The Securities and Exchange Commission (SEC) recently indicted Brown, alleging that after his disbarment he had continued to act as a "money coach." The SEC alleges that Brown was charging clients for his financial advice. From the time that Brown was barred in 2011 until May 2014, Brown allegedly deposited $330,000 worth of clients' checks into his account.
Paul Greenwood, a former co-owner of the New York Islanders, was sentenced to ten years in prison on fraud charges. From 1996 through the beginning of 2009, Greenwood and his business partner, Stephen Walsh, used the businesses that they operated, Westridge Capital Management Inc. and WG Trading Co. LP, to swindle funds from investors. The men allegedly cheated institutional investors out of more than a half-billion dollars. Greenwood used the money for a teddy bear collection, a controlling interest in the New York Islanders, and numerous other personal expenditures.
Former NBA player, Sam Young, was awarded $2 million after allegedly being defrauded by his broker, Jinesh "Hodge" Brahmbhatt. The fraud began in 2012 when Brahmbhatt advised Young to invest in unregistered promissory notes. The worthless notes were issued by CFP Group Inc. and also Success Trade Securities, Inc. Brahmbhatt had worked at Success Trade Securities, Inc. in Washington, D.C.
After allegedly bilking clients of almost $1.7 million, Blake B. Richards, a former LPL broker, was ordered to pay $2 million by Judge Willis B. Hunt, Jr. The Securities and Exchange Commission (SEC) first announced the charges against Richards in the summer of 2012. The SEC believes that Richards began advising at least seven clients to invest into funds and entities that he controlled. The investors were told that their funds would be reinvested into conservative investments, but in reality it was going to Richards to pay his own personal expenses. Richards allegedly kept up scam by creating fake statements for each of the clients. LPL has commented that they began an investigation and terminated him after another advisor had tipped the company off. In June 2013, shortly after he was terminated, Richards was also barred from the securities industry by the Financial Industry Regulatory Authority.
Jo Ellen Fisher, a former Peoples Bancorp employee and financial advisor for Raymond James, has officially been barred from the securities industry. Fisher was accused of embezzling almost $1 million from an elderly client. Fisher allegedly transferred $924,750 from a trust of the 95 year old investor to an account under her daughter's name. Fisher was then able to use that money on her own personal expenses, including her mortgage, cars, and jewelry. In her own defense, Fisher claimed that the client was her daughter's godfather and he wanted her daughter to have the money when she turned 21. FINRA claims that Ms. Fisher's defense is not supported by legitimate documents. Raymond James is now seeking $800,000 from Fisher. They have asked a federal judge to freeze all assets and accounts held by Fisher and to give them claim on all her assets.
As the holiday season approaches, it is important to be on the lookout for identity theft and financial scams. Those most likely to be targeted are those who are age 50 and older. This demographic is believed to be the most vulnerable and an easy target for a number of reasons including their potential to have a large retirement savings, and an established credit history. The use of the internet and email have made accounts and personal information even more accessible to scammers.