SEC seeks jury trial in case against operator of phony GIC scheme

The Securities and Exchange Commission has gone to federal court in Connecticut seeking a jury trial against Lester Burroughs, an adviser at Lincoln Investment Planning in Torrington, Conn., for engaging in a scheme to defraud retail investors. [More: Investors pour money into ETF ahead of index reorganization] From November 2012 to at least January 2019, the SEC said, Mr. Burroughs misappropriated advisory client money for his own personal use, created and sold fictitious investment products he described as guaranteed interest contracts (GICs) to clients, and engaged in a Ponzi-like scheme by paying back some advisory clients with money stolen from other advisory clients." All told, Mr. Burroughs defrauded at least five clients and failed to return at least $560,000 to three of his clients, the SEC said. The agency is seeking disgorgement of all ill-gotten gains from Mr. Burroughs' unlawful conduct, together with prejudgment interest, civil penalties, and other relief "the court may deem appropriate." [Recommended video:​ Ed Slott: Make sure your small business clients consider this before they convert IRAs to Roths] Part of Mr. Burroughs' scheme, the SEC said, involved the sale of what he described as a guaranteed interest contract. The supposed GICs paid a return of 4% or 7% per year for the life of the contract, but Mr. Burroughs never invested his clients' money in actual GICs. Instead, he misappropriated their money and provided them with fake documents to cover up what he had done.