A former broker whose 13-year career was littered with stints at firms that were kicked out of the securities industry was sentenced last week to seven years in prison for a $2.4 million South Florida tech scheme that targeted the elderly.
The ex-broker, Isaac Grossman, 47, was sentenced last Thursday by a federal district judge in Fort Lauderdale for directing a fraud in which he sold stock in his South Florida-based technology company to elderly investors across the country and then misappropriated the investors’ funds for his own personal use, according to a statement by the U.S. Attorney's Office for the Southern District of Florida.
He was also ordered to pay close to $3 million in restitution, according to court documents. Grossman could not be reached to comment.
According to his BrokerCheck report, Grossman was registered with 12 firms from 1997 to 2010. Six of those firms were expelled from the industry by the Financial Industry Regulatory Authority Inc. and another, GunnAllen Financial Inc., ran out of cash in 2010, forcing it to shut down and then later file for bankruptcy.
During that time, Grossman was registered on two separate occasions with Salomon Grey Financial Corp., a defunct Dallas firm that Finra's predecessor, the National Association of Securities Dealers, expelled in June 2006 for "widespread violation of industry rules," according to Finra.
When advisers and brokers work at small brokerage firms that are booted from the industry, that's a well-known red flag for investors and regulators; brokers hopping from one firm to another in short periods of time is also widely regarded as a warning sign.
From September 2014 through April 2018, Grossman raised approximately $2.4 million in investor funds for his company, Dragon-Click Corp., by soliciting investments from elderly retirees nationwide, according to the statement.
What he didn't explain to his elderly clients was his history in the securities industry, according to the U.S. Attorney's Office.
He concealed from investors that, prior to raising funds for the purported Internet shopping application, Dragon-Click, he had been permanently barred from acting as a broker by Finra in 2012. He had also been permanently banned from commodities trading by the Commodity Futures Trading Commission.
Instead of using investors’ money for any legitimate business purpose, Grossman took it for his own personal use, according to the U.S. Attorney's Office.
He spent $1.3 million on gambling, diamond jewelry, luxury cars, home mortgage payments, tuition payments for his children’s private school education, and other personal expenditures. His unlawful expenditures included a McLaren MP4-12C, a Chevrolet Corvette and a 4.81-carat diamond ring.
RIA aggregator adds $4.8 billion in client assets across seven states as demand grows for alternatives to traditional succession models.
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
Shareholder targets FS KKR Capital's directors over alleged portfolio valuation and dividend missteps.
UBS has a history of costly litigation stemming from the sale of volatile investment products.
New director David Woodcock puts firms on notice over fees, conflicts, and liquidity risk as private credit shows signs of stress.
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline
