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

The registered investment adviser faces up to five years in prison, as well as criminal forfeiture and a fine

Mar 3, 2017 @ 1:33 pm

By Bloomberg News

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Marc Broidy, the founder and chief executive of Broidy Wealth Advisors in Los Angeles, has pleaded guilty in federal court to withdrawing $640,000 in excess management fees from client accounts and misappropriating more than $865,000 worth of stock held in trusts, over which he was trustee.

As part of a plea agreement entered at the U.S. District Court in Brooklyn, N.Y., Mr. Broidy, 43, agreed to make restitution to the victims of his fraud. The registered investment adviser faces up to five years in prison, as well as criminal forfeiture and a fine, the Justice Department said https://www.justice.gov/usao-edny/pr/los-angeles-investment-adviser-pleads-guilty-investment-adviser-fraud-stealing-more-15 in a release.

From approximately November 2010 to July 2016, according to documents filed at the court, Mr. Broidy had discretionary authority to buy and sell securities in brokerage accounts he set up for clients and was permitted to deduct management fees from those accounts as compensation. Instead of deducting the amounts he was permitted to bill, Mr. Broidy took more than $640,000 in excess fees for three of his clients, the government said. To hide his theft, the government said Mr. Broidy falsified many of those clients' Internal Revenue Service Form 1099s so that the forms reflected far less in management fees than Mr. Broidy actually took.

When one client discovered the theft and forced Mr. Broidy to repay the stolen fees in a settlement, Mr. Broidy allegedly sold more than $865,000 worth of stock held in trust accounts that another client had established for his children, and for which he had appointed Mr. Broidy trustee. Mr. Broidy also encouraged several clients to invest in startup companies that had agreed to pay him a percentage of any money he raised for the companies, unknown to his clients, the government said.

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