An unexpected visit by an ING Financial auditor uncovered a potential scam at Breard & Associates Wealth Management. Now, infomercial star Rhonda Breard faces fraud charges.
A Kirkland, Wash., investment adviser accused of stealing an estimated $8 million from at least 20 clients was arrested by federal agents Wednesday.
Rhonda Breard, who promoted her investment expertise in television infomercials and radio spots, reportedly sniffled as as she appeared in federal court on a mail-fraud charge.
Prosecutors are trying to identify all the financial adviser's assets in a bid to recover some funds for her client.
"We are cooperating fully with federal authorities," her attorney, Ron Friedman, said after the hearing. "We intend to continue to cooperate."
Clients claim Ms. Breard, something of a minor celebrity in Seattle, spent their life savings on million-dollar homes, boats, cars and a stockpile of expensive jewelry.
According to published reports, prosecutors said the potential fraud came to light early this year when an ING auditor made a surprise visit to Ms. Breard's office. Apparently, the auditor uncovered a locked file cabinet in the office. Contents from the cabinet purportedly revealed that Ms. Breard had misappropriated money from her clients.
A magistrate judge released the adviser on the conditions she engage in no financial transactions of more than $500 and not transfer any of her assets.
Ms. Breard, who has been licensed to sell securities through ING Financial Partners since 2002, is already facing civil lawsuits. One couple sued her and ING in U.S. District Court in Seattle on Tuesday. The couple alleges that ING failed to adequately supervise Ms. Breard.
Dana Ripley, a spokesman for ING, issued a statement Wednesday saying that the company would defend itself against the lawsuit. The company terminated Ms. Breard's securities licenses and notified authorities when it learned of her actions, he noted.
The mail-fraud charge is based on an allegation that the adviser mailed false account financial statements to clients to cover her tracks. Other charges could be added later.
"We are aggressively trying to learn information about her clients and assets, and we want any assets preserved for victims in this case," U.S. Attorney Jenny Durkan said in a news release.
Some of the clients told investigators they had invested with Ms. Breard for more than two decades. They said that a few years ago, she began asking them to liquidate those accounts and write her checks which she would then invest in new accounts.
Ms. Breard apparently disappeared on Feb. 10, the day that her office was shuttered after she lost her broker agreement with ING. According to a local press account, two separate sources in Washington claimed that Ms. Breard attempted suicide two times on Feb. 10.
On Feb. 27, she tried to sell large amounts of jewelry, the article said.
If convicted, the financial planner faces a sentence of up to 20 years in prison and a fine of up to $1 million.
[The Associated Press contributed to this story]
