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.”

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