Securities Cases: Broidy Wealth Management Advisors Founder Pleads Guilty to Fraud, Bondholders File Arbitration Claim Against BOK Financial, and SEC Files Complaint in $5M Pyramid Scam

RIA Misappropriated Over $865K and Withdrew $640K in Excess Fees, Say Prosecutors
Broidy Wealth Advisors CEO Mark Broidy has pleaded guilty to taking $640K in excess management fees from clients and misappropriating over $864K in stock that were in trusts of which he was the trustee. Now, the registered investment advisor must make restitutions to those whom he defrauded. He could end up serving up to five years behind barsamong other penalties.

According to the Justice Department, from around 11/2010 to 7/2016 Broidy billed more than what he was allowed to in compensation, which caused three clients to pay more than $640K in excess fees. He concealed his theft by falsifying those clients’ IRS Form 1099s.

After one client demanded that Broidy pay back the stolen funds the latter allegedly sold over $865K of stock from another client’s trust accounts, which were for that person’s children. Broidy also suggested that several clients invest in startups with which he had deals to pay him part of any money he raised on the companies’ behalf. The clients didn’t know about these arrangements.

Bondholders Pursue BOK Financial Over $1M in Lost Capital
Six people with municipal bond revenues that were underwritten by Atlanta businessman Christopher Brogdon have filed a bond fraud claim with the Financial Industry Regulatory Authority Arbitration against BOK Financial (BOKF) for mismanagement. The firm was the trustee and dissemination agent. A deceased relative had bestowed the bonds to the investors.

It was in November 2015 that the SEC brought a civil case against Brogdon, accusing him of fraud involving more than 40 entities, including nursing homes in which he falsely claimed that investors would be paid interest for their investments. Instead, he mixed investors’ funds together and used their money to fund other business ventures and take care of his own expenses.

Last year, a federal court judge ordered Brogdon to find a way to pay investors who were harmed $85M. BOK Finanical settled with the SEC related to the Brogdon fraud last year.

Now, the bondholders want BOK Financial to pay them for the harm that they suffered. They want the return of their lost capital and other damages.

Two Accused in Pyramid Scam that Bilked Investors
The US Securities and Exchange Commission has filed a federal case against Gutemberg Dos Santos and Renato Rodriguez over their alleged involvement in a $5M pyramid scam in California and Mexico that primarily targeted Hispanic-Americans and Asian-Americans. The regulator said that the two men misappropriated about $5M from about 100 investors from 9/2013 to 9/2014, taking nearly 30%—that’s around $1.8M—for their own use.

Investors were told that they would gain points resulting in a passive return rate that could be accumulated upon investing and also as reward for bringing in new investors. The points supposedly could be changed to cash or used to buy certain software that could be sold for more points or cash. In truth, said the SEC, not many of these products existed nor were they bought or sold. The points eventually ended up being worthless.

At Shepherd Smith Edwards and Kantas, LTD LLP, we work with investors all over the US in trying to recoup their securities fraud losses. Contact us today.

RIA Marc Broidy pleads guilty to stealing $1.5M from clients, InvestmentNews

SEC Charges Promoters Behind Pyramid Scheme, SEC