The SEC announced Thursday it has charged a previously registered broker with stealing approximately $3 million from clients, some of whom were elderly or disabled.
In a complaint filed Wednesday in a federal court in Ocala, Florida, the Securities and Exchange Commission alleged that from August 2016 through at least last November, Joseph Michael Todd misappropriated at least $3 million from 20 customers of a brokerage where he was working at the time.
Todd told his clients at the firm to write checks to an entity called Todd Financial Services and said he would invest the money in various securities. Instead, he pocketed the cash.
“Todd commingled investors’ funds and kept the money for his own personal use, spending it on lavish real estate, boating, hunting, casinos, and adult entertainment,” the SEC complaint states. “Todd perpetuated the fraud by making material misrepresentations to customers regarding the use of their funds in meetings that took place in person, in phone conversations, and in documents that he prepared and provided to customers.”
The SEC does not identify the firm in the complaint. Todd’s BrokerCheck record indicates that he was working at Centaurus Financial Inc. during the time that the fraud occurred.
Todd was dually registered as a broker and an investment advisor representative. He used Todd Financial Services of Crystal River, Florida, for the brokerage and advisory services he provided as a registered representative of Centaurus. Todd also was owner of TFS Insurance Services, which held itself out as an insurance brokerage service.
“Since at least August 2016, Todd misappropriated at least $3 million in funds that certain of his customers sent directly to Todd or the Todd LLCs,” the SEC complaint states. “Contrary to Todd’s promises to these customers, he never purchased any investments and/or secured the funds in custody accounts for future reinvestment.”
The SEC alleged that Todd gave defrauded customers forged account and portfolio holding statements. The complaint describes most of Todd’s clients as “senior citizens, retirees, or individuals with disabilities.”
To settle the SEC’s charges, Todd consented to injunctive relief and an industry bar and to pay disgorgement, prejudgment interest and civil penalties that will be determined later by the court. He neither admitted to nor denied the SEC’s allegations.
Todd has already been barred by the Financial Industry Regulatory Authority Inc. He filed a motion in a Florida state court in January to liquidate and distribute his assets to creditors.
A phone number for Todd Financial Services was out of order. Centaurus Financial did not immediately respond to a request for comment.
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