SEC charges Wells Fargo adviser with defrauding clients out of $1 million

SEC complaint: John Gregory Schmidt sold securities from seven of his clients to cover shortfalls in 10 other accounts.

The Securities and Exchange Commission charged a former Wells Fargo adviser with allegedly defrauding his retail clients out of more than $1 million.

John Gregory Schmidt, who is based in Dayton, Ohio, sold securities belonging to at least seven of his clients to cover shortfalls in 10 other clients’ accounts, according to the SEC complaint.

To conceal his actions, Mr. Schmidt allegedly supplied fake account statements to his clients, mostly elderly individuals, and used fraudulent letters to authorize sales and withdrawals from their variable annuities. He received more than $230,000 in commissions from these customers.

Mr. Schmidt could not immediately be reached for comment.

Kim Yurkovich, a spokesperson for Wells Fargo Advisors, said, “We are cooperating with all legal and regulatory investigations, and Mr. Schmidt is no longer affiliated with Wells Fargo Advisor’s Financial Network.”

In November 2017, the Financial Industry Regulatory Authority Inc. barred Mr. Schmidt from the securities industry after he failed to cooperate with an investigation into his termination by Wells Fargo Advisors Financial Network. Mr. Schmidt was discharged by Wells Fargo in October 2017 after allegations of unauthorized money movement.

According to BrokerCheck, Mr. Schmidt had seven disclosures over his 37 years in the industry, most filed following his termination by Wells Fargo Advisors by clients alleging that their funds had been misappropriated.

The SEC is seeking disgorgement of ill-gotten gains as well as prejudgment interest and civil penalties.

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