A 63-year-old investment advisor from Madison, Wisconsin, has been sentenced to four and a half years in federal prison for bilking his retiree clients out of more than a million dollars in a scheme that lasted more than two decades.
Thomas Demergian, who defrauded clients of $1.8 million, was sentenced by US District Judge William Conley last week over charges of wire fraud and tax evasion.
Demergian pleaded guilty to the charges in April and will begin serving his sentence this month. Beyond the prison sentence, he has been ordered to pay restitution.
According to a statement from the Department of Justice, Demergian’s scheme began in 2000 when he persuaded clients to invest through a business called IRT Company.
While he falsely assured clients their funds would be invested in real estate trusts and mutual funds, he instead funneled the money into a personal bank account and used it for gambling, travel, cars, and other personal expenses.
For over two decades, Demergian kept clients in the dark, showing them fabricated portfolio summaries with positive returns despite the fact that no legitimate investments had been made. Whenever clients requested to liquidate their investments, he would tell them it would be imprudent or give other false reasons why those requests couldn't be completed.
The scheme was unravelled in 2023 after a client’s family member raised concerns about the investments.
Demergian's BrokerCheck record shows Finra permanently barred him from the industry in March 2023 after admitting to division staff that he "misappropriated at least $1.5 million from 14 investors over 20 years." Ultimately, investigators found his fraud led to approximately $1.8 million in losses for his numerous victims.
Aside from his clients, Demergian also cheated the IRS out of federal taxes from 2017 to 2022 by failing to report over $400,000 in illicit income, which let him dodge $104,779 in tax obligations.
Noting Demergian's strategy of "cynically [targeting] elderly and vulnerable victims, many of whom he had also befriended," presiding Judge Conley said "in terms of white-collar crime, this is the worst.”
While Conley acknowledged Demergian’s assistance in identifying the full extent of the losses, she was also quick to note that cooperation only came after he had been "found out."
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