Former Next Financial broker settles charges he ran $3.9 million fraud

Douglas Simanksi told clients he would invest their money in a 'tax free' fixed-rate investment, SEC charges

Nov 5, 2018 @ 1:48 pm

By Bruce Kelly

The Securities and Exchange Commission said Friday that a former Next Financial Group Inc. broker has agreed to settle charges that he operated a $3.9 million fraud.

The SEC had charged the broker, Douglas Simanski, with operating a long-running fraud. Mr. Simanski was based in Altoona, Pa., and was registered with Next Financial from 1999 to 2016, according to his BrokerCheck report.

The SEC's complaint alleges that Mr. Simanski, 53, raised more than $3.9 million from approximately 27 of his brokerage customers and investment advisory clients, many of them retired or elderly, by telling them that he would invest their money in either a "tax free" fixed-rate investment, a rental car company or one of two coal mining companies in which Mr. Simanski claimed to have an ownership interest.

He allegedly told the investors to write checks payable to personal bank and brokerage accounts he opened in his wife's name. The complaint alleges that instead of investing the money as he promised, Mr. Simanski used the money largely to repay other investors and for his personal use.

According to the complaint, Mr. Simanski's scheme collapsed when one of his clients contacted the Financial Industry Regulatory Authority Inc., and the broker then admitted his scheme to his employer. Finra barred him from the securities industry in 2016.

Barry Knight, president of Next Financial, wrote in an email that "when Next became aware of the allegations against Mr. Simanski, we took immediate steps to address the matter."

The firm interviewed Mr. Simanski about the allegations, which prompted his admission of the unauthorized activities. The firm immediately terminated his affiliation with Next and reported him to Finra.

Next also reached out to clients affected by Mr. Simanski's actions to determine the extent of the damage and reported the matter to the U.S. Attorney's Office, Mr. Knight wrote, adding that all pending claims by his clients have been resolved.

According to the SEC complaint, Mr. Simanski is to "disgorge ill-gotten gains," along with interest, and pay civil penalties as part of the settlement; the complaint did not specify amounts.

In a parallel action, the U.S. Attorney's Office for the Western District of Pennsylvania announced Monday that Mr. Simanski pleaded guilty to criminal charges.

A 2016 article by the Pittsburgh Post-Gazette reported that Mr. Simanski's clients included a VFW post near Altoona.

Mr. Simanski's attorney in the criminal matter, Christopher Brown, did not return a call to comment.

0
Comments

What do you think?

View comments

Most watched

INTV

How advisers can be a gamechanger for women investors

Why women defer to men when it comes to finances and how advisers can combat this phenomenon and make a difference for female investors, according to Heather Ettinger, founder and CEO Luma Wealth Advisors.

INTV

How the 2020 elections could impact ESG investing

Joseph Keefe, president of Impax Asset Management, on the elections and how advisers can build a bridge to the next generation of clients with ESG investing.

Latest news & opinion

Charles Schwab reportedly in talks to buy USAA brokerage, wealth management business

The deal would net Schwab roughly $100 billion in new assets.

Advisers scramble to help retirees navigate looming Fed rate cut

The Fed's first interest-rate cut in a decade has advisers warning against chasing the bait of risk over safety.

CFP Board to announce possible delay of new fiduciary standard

Organization's CEO confirms meeting with Edward Jones, says broker-dealer still considering how to move forward.

Departure of Alexander Acosta could slow DOL effort to revise fiduciary rule

Acting secretary Patrick Pizzella will have to make political decision to move ahead.

SEC member Peirce to brokers: Talk to us early, often about Reg BI implementation problems

She's willing to advocate for additional compliance time if firms have made a good faith effort.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print