Former Wells Fargo and Morgan Stanley broker Elias Herbert Hafen has been sentenced to 30 months in prison for having defrauded his clients out of more than $1.6 million. Mr. Hafen, of New York, previously pled guilty to one count of investment adviser fraud.
From 2011 until 2018, according to the U.S. Attorney’s Office for the Southern District of New York, Mr. Hafen engaged in a scheme to defraud 11 of his clients into believing that he had access to a high-yield investment fund with guaranteed returns. He told them the fund was not affiliated with Morgan Stanley, where he worked from 2008 to 2018.
On Mr. Hafen’s advice, these clients transferred approximately $1.6 million directly to his personal bank account for investment in the purported investment fund, the U.S. Attorney’s Office said in a release. He also created fictitious “Investor’s Statements” that bore the name of a nonexistent investment company and purported to detail the status of his victims’ investments.
In 2018, Mr. Hafen moved from Morgan Stanley to Wells Fargo, which fired him in August 2018 after he admitted into entering into financial arrangements with clients who were not approved by the firm. The Financial Industry Regulatory Authority Inc. barred him from the securities industry in October 2018.
Mr. Hafen began his securities career in 1979 at Merrill Lynch and worked at five firms before joining Morgan Stanley.
FINRA barred the advisor, Sung Moo Cho, last month.
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