Ex-LPL rep gets long spell in prison for defrauding longtime customers

Kravitz took funds out of clients' accounts, put the cash in his own account; sentenced to 41 months in jail
MAR 06, 2012
A former LPL Financial LLC broker was sentenced Tuesday to more than three years in prison and ordered to pay $1.8 million in client restitution. The broker, Elliot Kravitz, pleaded guilty last May in federal court to wire fraud. According to the charge against him, Mr. Kravitz took funds out of clients' brokerage accounts and put the money into an account he controlled. On Tuesday, the rep was sentenced to 41 months in prison for his actions. Mr. Kravitz, 54, was affiliated with LPL from September 2009 to March 2010 and based in Mason, Ohio. He was affiliated with Waterstone Financial Group Inc. starting in 1992. LPL acquired Waterstone in 2007 and then merged the firm into LPL in 2009. LPL fired Mr. Kravitz in March 2010 for “misappropriation of client funds,” according to the rep's profile on BrokerCheck. “When Mr. Kravitz violated the trust of his clients by misappropriating funds under his care, he also defrauded first Waterstone Financial Group and then LPL Financial LLC,” said Michael Herley, an LPL spokesman. “Each of the broker-dealers has worked to provide restitution to all customers involved, and we are now satisfied that this criminal matter has been resolved by a court of law.” Mr. Kravitz's scheme began when he advised a client to buy a real estate investment trust, according to the FBI. “In July 2007, Kravitz advised one of his clients to pull money out of the stock market, telling the client it was too volatile and to invest it in a [REIT],” according to a statement by the FBI's Cincinnati Division. “Instead of investing it in the real estate investment trust, Kravitz put the money into an account he controlled. Mr. Kravitz made 12 additional withdrawals totaling $713,765.17 from the client's account by changing the dates on the original distribution form and faxing the requests to the company holding the account.” “Kravitz similarly diverted $1.127,603 from eight other clients for his personal use,” according to the statement. So far, LPL has restored funds to all but one client, according to the FBI statement. Mr. Kravitz “criminal conduct was knowing and manipulative, particularly because his victims were longtime customers who completely trusted him with their finances,” Assistant U.S. Attorney Jennifer Barry said in a sentencing memorandum filed with the court. “Kravitz took advantage of these relationships and abused a position of trust.”

Latest News

SEC Says Game Service Roblox Part of ‘Active Investigation’
SEC Says Game Service Roblox Part of ‘Active Investigation’

Short sellers previously said the company was under investigation, though Roblox denied allegations.

Musk’s DOGE descends on CFPB with intention to shut it down
Musk’s DOGE descends on CFPB with intention to shut it down

The Consumer Financial Protection Bureau is in the crosshairs of the Republican group that is widely attempting to dismantle government agencies.

Advisor fighting Finra banishment loses $17.7 million dispute with old firm
Advisor fighting Finra banishment loses $17.7 million dispute with old firm

National Securities Corp. sued the advisor in 2020, alleging breach of contract and unjust enrichment.

Job numbers, inflation leaving room for Fed to hold rates
Job numbers, inflation leaving room for Fed to hold rates

Recent data support a measured pace by the Federal Reserve for the year ahead.

Private assets remain hot despite surging stock market
Private assets remain hot despite surging stock market

Financial advisors are still adding alternatives despite the surge in publicly traded stock prices

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.

SPONSORED Why wealth advisors should care about the future of federal tax policy

Blue Vault features expert strategies to harness for maximum client advantage.