A one-time South Florida broker with 15 years of experience in the securities industry pleaded guilty for his role in a $3.6 million investment scheme called Castleberry Financial Services.
The former broker, Scott P. Strochak, 58, had worked most recently in the securities business in 2015 at Morgan Stanley, according to his BrokerCheck report.
He pleaded guilty on Friday to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years imprisonment, according to court documents.
Mr. Strochak was also charged on Monday in a civil case by the Securities and Exchange Commission for his participation in the fraud that raised money from at least 17 retail investors.
Mr. Strochak and two other Castleberry Financial executives, T. Jonathan Turner and Norman M. Strell, were charged by federal prosecutors in May with fraud for promising investors equity-like returns of 8% to 12% annually for investments in bond-like investments, according to court documents. They claimed that Castleberry had grown to a business that deployed hundreds of millions of dollars of capital to invest.
Meanwhile, a spokesman for the office of the U.S. Marshal, the Southern District of Florida, confirmed that Mr. Turner, 53, died August 12 in federal custody in Palm Beach County as he awaited trial.
Mr. Turner, formerly known as Jon Barri Brothers, had falsely claimed to have had extensive finance industry experience, an MBA degree and a law degree, while concealing that he had served 18 years in prison for multiple fraud, theft and forgery felonies.
His cause of death was not given by federal authorities.
Mr. Strochak's attorney, Brian Bieber, said his client has ackowledged his wrongdoing.
"Mr. Strochak has accepted full responsibility for his criminal conduct," said Mr. Bieber, an attorney with Gray Robinson. "Unfortunately, he was lured into this scheme by Turner and Strell, and when he realized the fraudulent nature of the circumstances, he was in too deep and made serious errors in judgment."
"We believe that restitution will be made," Mr. Bieber added. "It's too early to tell the full amount of the recovery. Mr. Strochak has agreed to settle all matters with the Securities and Exchange Commission as well as the U.S. Attorney's office for the benefit of those who lost money."
InvestmentNews in April focused on Castleberry Financial as a type of firm or investment that investors and financial advisers needed to be on guard for: investment funds promising above-market returns that employ networks of brokers, former brokers, insurance agents or others lurking on the fringes of the industry to sell their investments that take advantage of unsuspecting investors.