August, 2008

A New Jersey man was sentenced on charges he defrauded senior citizens out of nearly $2 million by claiming he would invest their annuity deposits when in fact he spent their money on luxury automobiles, gifts for exotic dancers, gambling, and personal expenses. The advisor was sentenced to 87 months incarceration and restitution on charges of mail and wire fraud and a violation of the Investment Advisers Act.

A Georgia stockbroker was sentenced Tuesday to five years in federal prison for defrauding her clients. She was also ordered to serve three years on supervised release and to pay restitution of almost $1.2 million. Federal authorities presented evidence at trial that the broker fraudulently transferred $679,670 from the accounts of nine clients. As part of the scheme, she forged her clients’ names on letters of authorization, causing funds to be transferred to accounts she controlled. She then used the stolen funds to benefit herself, family members or other clients.

A South Carolina financial planner was sentenced to 51 months in prison, followed by three years of supervised release, and ordered to pay a $50,000 fine on four counts of tax evasion and one count of making false statements in a bankruptcy petition.  Trial evidence revealed that the planner made more than $2 million in commissions for selling financial products such as insurance policies, annuities, and mutual funds. It also revealed that he did not file tax returns or pay any income taxes during any of the three years in question. In fact, the planner had not filed personal tax returns since 1995. However, he used bogus tax returns to attach to loan applications and other financial dealings. To help hide his income, the planner used the bank accounts of several entities that he controlled. He then signed and filed a bankruptcy petition claiming that his income was only approximately $17,000, when, in fact, it was approximately $800,000.

July, 2008

A federal jury convicted six men in a $60-million tax scam that peddled phony trusts through a Chicago firm to nearly 700 wealth y clients. The advisors were convicted of diverting income from businesses into sham trusts, hiding millions of dollars of income and producing a $60-million
tax-revenue loss to the U.S. government. The May 2008 convictions join more than 30 other convictions relating to the so-called “abusive trust” scheme. The felons will be sentenced in August and September.

A Kentucky financial planner got 37 months in prison for conspiracy and tax fraud relating to an off-shore insurance fraud. The planner operated an insurance agency that conspired with an insurance company in the U.S. Virgin Islands to sell phony “loss of income” insurance. The “policies” were sold as a tax-deductible vehicle that would return nearly 85% of the premium paid through a supposedly non-taxable offshore loan or investment.

A California resident was sentenced to 14 years in prison for grand theft, forgery, tax evasion, and transacting insurance without a license. The convicted resident created a bogus insurance company that sold medical malpractice insurance to medical personnel through California and other states. The government said the individual operated the company without state certification, issued fraudulent documents, and failed to file tax returns. The “agent” used the millions of dollars generated to purchase fine art and 32 acres of prime California real estate.

June, 2008

A Texas financial advisor was sentenced in April 2008 after pleading guilty to wire fraud. He raised $805,000 from investors through wire transfers, for oil and gas drilling projects that his firm did not own or control. He was sentenced to 33 months in federal prison and ordered to pay restitution of $805,000.

A Connecticut insurance agent had his license revoked for using clients’ assets without permission for his own business and personal gain. State regulators found evidence of forgery and conversion of client funds to the agent’s personal and business bank accounts. The funds were held from 4 to 10 months before being reinvested on behalf of the clients.

A California life insurance agent was convicted and sentenced on charges he defrauded an elderly couple of nearly $300,000. He was sentenced to serve a two-year prison term and pay $291,576 in restitution to the victims' estate, in addition to $5,000 in fines. California authorities determined that between June 1, 1994 and August 31, 2002, the agent became the trustee of his elderly client's estate.  He then took nearly $300,000 in client funds without the person’s knowledge or consent.