A former Wachovia Securities LLC branch manager in Toledo, Ohio, has been charged with stealing between $17 million and $40 million from about 45 investors by using a Ponzi-type scheme, according to the Department of Justice.
NEW YORK — A former Wachovia Securities LLC branch manager in Toledo, Ohio, has been charged with stealing between $17 million and $40 million from about 45 investors by using a Ponzi-type scheme, according to the Department of Justice.
Other Wachovia employees invested in the scheme, and the current manager of the same Toledo branch profited from the scam, alleges an attorney who has filed an arbitration claim for two former clients of Wachovia.
Last month, the U.S. attorney’s office in the northern district of Ohio filed an “information” — an unusual pre-indictment — against ex-Wachovia branch manager William Sirls, alleging that he defrauded investors by selling them investments that simply didn’t exist.
From January 2000 through September of last year, Mr. Sirls sold two phony investment schemes that promised access to exclusive transactions in real estate and stocks, according to the U.S. attorney’s “information,” which was filed Feb. 16 in U.S. district court in Toledo.
According to federal investigators, Mr. Sirls, who they say carried on the scheme after he left Wachovia in 2005, also issued promissory notes to investors in which he promised a high rate of return in as short a period as two weeks and used money fraudulently obtained from later investors to pay off earlier investors.
He faces one charge each of mail fraud and money laundering.
Side deal
That a former branch manager has been charged with such a scam and that the current branch manager, Randall Hunt, allegedly made money from it is extraordinary, said Andrew Stoltmann, a plaintiff’s attorney who represents two of Mr. Sirls’ former clients.
“I’ve never seen a branch office manager selling away,” said Mr. Stoltmann, whose firm, Stoltmann Law Offices PC, is based in Chicago. “To have a branch office manager investing in a side deal is incredible.”
Mr. Stoltmann has filed the NASD arbitration claim against Wachovia, Mr. Hunt and another broker, Mark Schneider, on behalf of two clients, one of whom is
83 years old. The combined claims have actual damages of more than $2.4 million, according to Mr. Stoltmann.
Mr. Sirls isn’t named in that claim, but two clients of Mr. Hunt and Mr. Schneider invested in the fraudulent schemes and lost money, according to the claim.
The U.S. attorney also charges that Mr. Sirls bought seven properties with proceeds from the alleged fraud scheme, including his residence in Grosse Ile, Mich.
Mr. Sirls turned himself into the U.S. attorney’s office in Toledo last September and also met with a Wachovia attorney to discuss the matter.
He intends to plead guilty to both charges, said Stephen Hartman, an attorney with Kerger & Associates in Toledo who represents Mr. Sirls.
“This is something he came forward to and admitted himself,” he said.
“He realized he wasn’t going to be able to get out of this,” Mr. Hartman added. “He felt very guilty about this.”
Mr. Sirls had a problem with gambling that factored into his actions, Mr. Hartman added.
Wachovia Securities, which is based in Richmond,Va., declined to comment on Mr. Sirls, because the matter is an continuing criminal investigation, said spokeswoman Teresa Dougherty.
Mr. Sirls used two means to get money for phony investments, according to the federal charges: He solicited investments in non-existent “busted trades” and “builder-discounted real estate,” which also was fake.
Busted trades occur when a customer of a brokerage firm orders the purchase of a stock, the firm buys the stock, the customer doesn’t pay for the stock, and the firm then sells the stock for a profit, according to a statement from the U.S. attorney’s office.
Mr. Sirls allegedly represented that builder-discounted real estate is the last few homes in a housing development that a builder would sell at a discount and that could later be sold for a profit.
In an affidavit taken in December, Mr. Sirls said that other Wachovia employees, including Mr. Hunt, invested with him in what were proposed as deals in non-existent California real estate. Some Wachovia employees made “an extraordinary profit above and beyond their investment,” while others “did not make money,” according to the affidavit.
Mr. Hunt didn’t return a phone call seeking comment. Mr. Schneider, the Wachovia broker, said he didn’t know anything about the Sirls matter.
