The SEC permanently barred two advisers this week, one of whom pleaded guilty to defrauding clients of $4.8 million while the other is facing charges of wire fraud in federal court.
The SEC barred ex-adviser Alan Gold, who the FBI has accused of defrauding clients of nearly $2 million and using some of the funds to pay off gambling debts.
Gold, who is based in Wilmette, Ill., a suburb of Chicago, launched his scheme in 2007 following his termination from Invest Financial, according to authorities. The Tampa, Fla.-based broker-dealer discharged Gold for violating firm policies with regard to borrowing money from clients and having client mail sent to his branch office, according his FINRA BrokerCheck record.
Gold lied to his clients about the reasons for his separation from his ex-employer, saying that he was forming his own firm, Gold & Associates, according to authorities. More than a dozen clients followed him to his new firm, eventually providing him $5 million to be invested in Facebook stock, real estate and alternative investments.
Gold's clients gave him the login usernames and passwords for their brokerage accounts at his old firm, which he said he would use to purchase securities. In fact, he transferred funds to a bank account he controlled, according to authorities.
Gold told FBI investigators that he spent the money on his lifestyle, including a gambling addiction, losing up to $5,000 per trip to casinos, according to authorities. He continued taking client money until 2014, when he felt "overwhelmed with guilt," according to the FBI.
He perpetuated his scheme by providing fake account statements and stock certificates for shares he never actually purchased, authorities say.
Gold stopped returning client phone calls – prompting one client who had invested nearly half a million dollars with Gold to call the police, according to authorities.
He is currently facing fraud charges in federal court. Authorities are seeking $1.8 million in restitution and about seven to nine years of imprisonment, according to court documents.
Gold could not be reached for comment. His attorney, Loren Blumenfeld, declined to comment.
In the second regulatory action, the SEC barred Perry Sawano, a former investment adviser, who pleaded guilty last year to running a $4.8 million Ponzi scheme, according to authorities.
Sawano operated the scheme from 2007 to 2013, soliciting funds from clients, some of whom were elderly, according to authorities. Sawano, who ran his own investment advisory firm based in Wheat Ridge, Colo., 20 miles west of Denver, made changes to clients' portfolios without consulting them, authorities charged. He also failed to disclose material facts and risks with regard to how he conducted business as well as the investments themselves. At times, he deposited investor money in shell company bank accounts that he controlled, according to authorities. He used approximately $1.2 million of client funds to pay his bills, and another $3.6 million as payments to other investors.
Sawano, who started in the business in 1992 according to FINRA BrokerCheck records, also lied to regulators, concealing the fact that he was taking custody of client funds, according to Colorado regulatory authorities.
An 85-year-old woman living in a retirement facility said Sawano had stolen $800,000 from her, authorities said. Peter Weir, district attorney for Jefferson and Gilpin counties, called Sawano's conduct "unconscionable."
Sawano was sentenced last year to 28 years in prison, according to authorities.