Third ex-Merrill advisor in Florida faces spotlight for illegal activity

For the third time in the past few months, Merrill Lynch is facing scrutiny due to a former financial advisor based in Florida for engaging in criminal activity.

Jared Eakes, 34, was a registered financial advisor with Merrill Lynch from 2016 to 2018, and last week he pleaded guilty to wire fraud and bank fraud that started 11 months after he left the firm, according to a statement from the U.S. Attorney’s office.

According to the plea agreement, Eakes portrayed himself as a legitimate advisor and contacted investment advisors who were looking to sell their advisory businesses and eventually stole $2.7 million of victim’s money from January 2019 to 2020, after he was no longer working at the wirehouse.

"The activity cited occurred after Mr. Eakes left Merrill Lynch and didn’t involve our firm," a Merrill Lynch spokesperson wrote in an email. 

InvestmentNews reported during the summer that a former Merrill Lynch financial advisor, Isaiah T. Williams, was arrested in June for his alleged involvement in the theft of almost $2.6 million from Reshad Jones, a one-time Miami Dolphins safety.

A few weeks later, another former Merrill Lynch advisor, Lino “Joe” Gutierrez, was sentenced to 17 years and six months in federal prison and ordered to pay more than $5.6 million in restitution for his role in a scheme to defraud Medicare. Gutierrez, 59, was sentenced July 25, in federal court in Tampa.

While the criminal activity among the three former is not related, it speaks to the problems large firms face in supervising and monitoring financial advisors and brokers in the post-COVID 19 era, according to plaintiff’s attorney.

Advisors working at large institutions, particularly in the booming wealth management market of Florida, are operating with more autonomy than ever, potentially leading to a lack of oversight.

“We’re seeing more of this kind of behavior at the wirehouses after COVID, part of the contributing factor is that advisors are used to working from home and meeting with clients outside the office,” said Scott Silver, a plaintiff’s attorney.

“We’ve seen these kinds of problems at the independent broker-dealers for years due to similar reasons,” Silver said. “How is the branch manager monitoring the day-to-day activities of these advisors? And in Florida, it’s the combination of a huge retirement community and a lot of bad actors.”

“The decentralized supervision infrastructure that the wirehouses are using is like a failed state,” said Andrew Stoltmann, a plaintiff’s attorney. “With brokers not under one roof, it makes it harder for the firm to supervise them.”

“And Florida is probably now the most compelling financial services market out there,” Stoltmann added. “There are more brokers than ever managing more money for more clients.”

Eakes faces a maximum penalty of 50 years in prison. A sentencing date has not yet been set.

After negotiating to take over management of the advisors’ client assets, between approximately January 2019 and February 2020, Eakes converted approximately $2.7 million of victim-investor funds to his own benefit, according to the U.S. Attorney’s office.

He withdrew the funds in cash, used investor funds to pay personal expenses, transferred investor funds to a Las Vegas-based casino company, and engaged in unauthorized options trading in a personal brokerage account. 

And between March 2020 and November 2021, Eakes fraudulently secured approximately $4.75 million in emergency funds through four Paycheck Protection Program, or PPP loans.