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Adviser allegedly stole $6M from terminally ill, disabled clients

Regulators have charged Matthew Weitzman with using certain client accounts as his 'personal piggy bank'

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By Bruce Kelly

June 10, 2009 2:44 pm ET

A New York investment adviser faces charges of stealing $6 million from clients who included some who were terminally ill or cognitively impaired.

Earlier today, the U.S. attorney's office for the Southern District of New York in Manhattan and the New York office of the FBI said they charged Matthew Weitzman, 43, of Armonk, N.Y., with one count of investment adviser fraud and six counts each of securities fraud and wire fraud.

He also faces charges from the Securities and Exchange Commission over the alleged theft of client funds.

According to the SEC complaint, since 2005 Mr. Weitzman used certain client accounts at AFW Wealth Advisors Inc. as his “personal piggy-bank” and even tried to continue stealing from one client who had died. AFW is a financial planning and investment management firm with offices in Purchase, N.Y. and Natick, Mass.

In some cases, Mr. Weitzman allegedly stole funds from clients who were not likely to scrutinize accounts statements from AFW’s broker-dealer.

In one instance, Mr. Weitzman allegedly misappropriated $433,000 in a series of unauthorized transfers from a client during the last three months of 2008, while that client was terminally ill.

According to the compliant, he forged the victim’s signature and sent a letter to the broker-dealer to authorize a transfer of $100,000.

The letter, however, was dated several days after the client’s death, the SEC said.

In a statement, federal authorities said that Mr. Weitzman had been charged with a multimillion-dollar scheme to defraud investors by using deception to misappropriate investor funds from a brokerage account, lying to investors about how their money was being used and converting $6 million of investor funds for his own use.

He is a co-founder of AFW Wealth Advisors, according to the federal authorities, and until this April, he worked as a financial planner there.

On its website, the firm said that, in 2000, it became a member of the Arlington Heights, Ill.- based National Associaton of Personal Financial Advisors.

NAPFA is an organization of financial advisers who charge clients fees for services. The group has long maintained its members use the highest fiduciary standards when working with clients.

Last month, the Securities and Exchange Commission charged James Putman, a former NAPFA president, with taking $1.24 million in kickbacks related to unregistered investment pools that their firm managed.

"It's hard to believe someone could do what he [Mr. Putman] is accused of doing," said Diahann Lassus, president of NAPFA. "It's tough for us. We're not a regulatory agency."

The group is dedicated to fighting to uphold and raise standards for all financial planners, she said. But reality is sometimes different, Ms. Lassus said. Mr. Weitzman was an acquaintance,she said.

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