SEC bars another advisor involved in church scam

SEC bars another advisor involved in church scam
Scams involving members of a group such as a church, known as affinity frauds, pose perils for investors, one attorney notes.
AUG 02, 2023

The Securities and Exchange Commission on Tuesday barred a former broker, Steven K. Woodard, who was based in Hawaii and allegedly preyed on members of his church in a $6 million scam.

The SEC's action against Woodard, 63, comes just days after it charged Brent Seaman of Naples, Florida, with fraudulently raising around $35 million from 60 investors, including fellow members of his church, for what he said were “safe” and “guaranteed” investments.

Woodard did not return a call Wednesday to comment. As part of the SEC's settlement, he neither admitted to or denied the commission's findings.

Woodard was a registered broker for 23 years, until 2005, and worked at seven different firms, according to his BrokerCheck profile.

Scams involving members of a group such as a church, known as affinity frauds, pose perils for investors, particularly as many are nervous and leery of the stock market and its ups and downs, one attorney noted.

"The message by the perpetrator of the scam is, I would never cheat my own people," said Scott Silver, a plaintiff's attorney. "Affinity fraud is as old as time and a big problem. Investors trust people in their own community, and this is not limited to any race, religion or creed."

"As a baseline, investors need to be better educated," Silver said. "If someone in their church or house of worship is selling securities, they must be registered with [the Financial Industry Regulatory Authority Inc.], the SEC or state. If the salesperson is not, investors must avoid those types of advisors."

In March, the SEC alleged that Woodard, from 2016 to mid-2021, raised approximately $6 million from about 30 purchasers of promissory notes issued by Morganwood Ltd., an entity he controlled. He solicited many of the victims through his church.

"Woodard told investors, some of whom were also his investment advisory clients, that he employed a risk-free trading strategy that focused on the preservation of capital but still yielded impressive returns," according to the SEC. But he invested only a small amount of client capital, made increasingly risky bets on the market and sustained heavy losses, according to the commission.

"Woodard used the majority of investor monies to pay investors phantom returns on their investments, and that instead of disclosing his mounting trading losses, he provided his investors with false account statements showing illusory gains in the value of their investments," the SEC said.

Gen X in for rude retirement awakening unless advisors step in

Latest News

Advisor moves: Raymond James lands $460M father-son team from Wells Fargo
Advisor moves: Raymond James lands $460M father-son team from Wells Fargo

Elsewhere, LPL recruits a $160M Edward Jones advisor in Alabama as William Blair opens a Dallas office with an ex-UBS wealth team

Schwab CEO says firm is blocking rogue AI agents from client accounts
Schwab CEO says firm is blocking rogue AI agents from client accounts

Rick Wurster says Schwab is shutting out unauthorized logins as agents like Meta's Muse, Instinct and OpenAI's Dots push into consumer finance

Schwab offers $4,800 credit to cover Claude enterprise seat cost for RIAs
Schwab offers $4,800 credit to cover Claude enterprise seat cost for RIAs

Schwab wants RIAs on Claude’s enterprise plan for its security controls, but most of its firms are too small to fill the 20-seat minimum

LPL Financial to miss 90% target on Commonwealth asset retention
LPL Financial to miss 90% target on Commonwealth asset retention

Looks like the LPL doubters were right all along.

RIA M&A ties second-best quarter as PE turns to minority stakes
RIA M&A ties second-best quarter as PE turns to minority stakes

Echelon Partners counted 125 wealth management deals in Q3 2026, with the quarter's biggest deal targets by assets selling minority stakes rather than getting swallowed.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor