More Bad Advisors
It seems that during good times or bad there will always be financial advisors who violate the trust their clients place in them. Although the miscreants below actually represent only a tiny fraction of the many reputable and trustworthy CFPs out there, I am sharing their stories in the hope that it will make you more vigilant with respect to selecting an advisor with whom to work.
According to the Department of Justice, Marcus Boggs, an ex-Merrill-Lynch employee, stole over $3 million of his client’s investment funds to pay for a lavish lifestyle. Most egregious was his theft of part of the recompense paid by the State of Illinois to a man who had been released from prison after having been wrongfully convicted of murder. Not only did Boggs lose his job, he was permanently banned from providing financial advice in the future as well as sentenced to three and a half years in federal prison.
Next we have William Neil “Doc” Gallagher, a radio personality in Texas known as the Money Doctor who promoted himself on Christian radio and through books with titles such as “Jesus Christ, Money Master.” He was convicted of running a Ponzi scheme that bilked seniors out of over $30 million and was sentenced to three life sentences in prison. Lori Varnell, chief of the Tarrant County DA’s Elder Financial Fraud team, said that “Doc Gallagher is one of the worst offenders I have seen. He ruthlessly stole from his clients who trusted him for almost a decade.”
Roderick Len Whited was a managing director of Northwestern Mutual Investment Services (NWIS) in Florida. He diverted almost $45,000 collected from fundraising events held at his branch office into his own account instead of into the account of the pediatric cancer charity for which they were intended. Without admitting guilt (and after paying back $35,000) he was allowed to resign from NWIS and agreed not to work in the brokerage industry again.
A Maryland man fraudulently posing as an investment advisor was indicted by a federal grand jury for stealing $750,000 from a non-profit foundation that provided services to wounded military veterans. Brian McQuade told the foundation he would invest the money for them but instead appropriated it for his personal use. He faces a maximum sentence of twenty years in federal prison if convicted.
As deplorable as these behaviors are, they pale in contrast to what some other advisors have been accused of. Scott Jay Matalon, a broker at RBC Capital Markets in Florida, was fired after having been arrested twice for allegedly battering two different women over a span of three weeks. He has pleaded not guilty. Texas broker Gregory Estes was charged in January with child sexual assault. Anthony Duwayne Turner was charged with felony murder and residential burglary in August for the killing of California Bank of America executive Michelle Avan, who had been a former girlfriend and colleague.
To me it makes no difference whether a financial advisor steals $100 or $10 million. Advisors should be held to a high standard because illegal (or even immoral) behavior can have a devastating impact on their clients’ financial future. What can you do to protect yourself? As I have written before, at a minimum check out the advisor on https://brokercheck.finra.org/ or on https://adviserinfo.sec.gov/. If you see any disclosures, or if you can’t find the person at all, that would be a flag that the advisor may not be worthy of your trust.