A former
LPL Financial broker has been ordered to pay nearly $2 million in disgorgement and penalties after being accused of bilking clients of nearly $1.7 million.
Starting in 2008, Blake B. Richards instructed at least seven clients to write checks to entities he controlled, such as “Blake Richards Investments” or “
BMO Investments,” with the understanding that those funds would be invested in fixed-income investments, variable annuities or equities, according to a case filed in the U.S. District Court of the Northern District of Georgia. Instead, those funds went to pay his personal expenses, the Securities and Exchange Commission said, and Mr. Richards would provide fictitious account statements.
The majority of the funds were retirement savings or life insurance proceeds from deceased spouses, the SEC said in a press release.
“None of the investments appeared on the client's brokerage account statements, and Mr. Richards received no commission income from these investments,” the SEC said in a statement. “Mr. Richards then siphoned off the funds entrusted to him for his personal use.”
The ruling Thursday came as part of a summary judgment by Judge Willis B. Hunt Jr.
The SEC first
announced the charges last summer.
An LPL spokeswoman, Betsy Weinberger, said at that time another adviser had tipped off the firm to the alleged misdeeds that occurred in accounts outside the firm. LPL had terminated Mr. Richards on May 3, 2013, launched its own investigation and informed regulators. Ms. Weinberger declined to provide an updated statement.
The
Financial Industry Regulatory Authority Inc. barred Mr. Richards in June 2013.
Mr. Richards' former brokerage firm affiliated with LPL, Lanier Wealth Management of Buford, Ga., did not return a call requesting comment.
At least two of the investors were elderly and two others were widowed, according to the SEC's original complaint.
To gain one investor's
trust, Mr. Richards delivered pain medication during a snowstorm to a client's husband who had been diagnosed with terminal pancreatic cancer, according to the SEC complaint.
LPL, which has around 13,600 brokers, was not named as a party in the SEC's complaint.
In an earlier version of this story, this information was left out: In 2008 when the SEC alleged that the activities began, Mr. Richards was an adviser with H&R Block Financial Advisors Inc. Ameriprise Financial Services Inc. announced it planned to acquire H&R Block Financial Advisors in August 2008. Mr. Richards moved to LPL in May 2009, according to Finra registration records. An Ameriprise spokesman, Chris Reese, declined to comment.
