The Securities and Exchange Commission Tuesday charged a Wisconsin financial advisor with defrauding 13 clients of $1.9 million and also misrepresenting the risk of GWG bonds and other investments, claiming those investments were low risk.
The advisor, Anthony B. Liddle, 40, was barred from the securities industry last June by the Financial Industry Regulatory Authority Inc. after he failed to cooperate with Finra's investigation into the matter. Calls to Liddle's firm, Prosper Wealth Management, or PWM, Wednesday morning could not be completed. The firm had $15.7 million in client assets, according to its most recent Form ADV.
GWG Holdings Inc., which sold $1.6 billion in bonds backed by life settlements through a network of independent broker-dealers, said in April it had voluntarily filed for Chapter 11 bankruptcy protection. Investors don't know what the L bonds are worth.
From at least June 2019 and continuing through May 2022, Liddle "conducted a fraudulent scheme that defrauded at least 13 of his advisory clients, most of whom were senior citizens," according to the SEC. "As part of the scheme, Liddle also made misrepresentations to advisory clients. Liddle followed a common pattern during the scheme."
Liddle directed clients to sell positions in securities and then to invest in the GWG bonds and other riskier investments, according to the SEC.
"First, Liddle misrepresented the risk of GWG L Bonds and other similar investments, and claimed the offered security was lower-risk than existing client investments," according to the SEC's complaint. "Based on Liddle’s misrepresentations, certain of his advisory clients were induced to sell, or directed Liddle to sell, existing securities holdings."
Liddle would then tell clients to send their newly available funds, including some who held funds not managed by his firm, to the Prosper Wealth Management, under the guise that Liddle would use the funds to purchase the new, allegedly lower-risk security on the clients’ behalf.
In the end, he stole the money, according to the SEC.
"Instead, Liddle misappropriated the approximately $1.9 million clients sent directly to PWM, never purchasing any investments as they requested," according to the SEC complaint. "Further, in order to
maintain the scheme, Liddle fabricated statements and made 'interest payments' purporting to be returns on client investments, but were in fact made by Liddle using client funds."
Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.
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