The Securities and Exchange Commission has barred former Securities America broker Hector May for running a $7.9 million Ponzi scheme with his daughter who served as the controller of his investment advisory firm.
May worked in the financial services industry for approximately 35 years, including as an investment adviser representative at Securities America from 1994 until March 2018, when he was fired. He also served as president and chief compliance officer of Executive Compensation Planners Inc., an investment advisory firm registered in New York.
The SEC accused May and his daughter Vania May Bell of misappropriating nearly $8 million from at least 15 investment advisory clients by perpetrating a Ponzi scheme in which he would offer to buy bonds for investment advisory clients, solicited their funds for the investments, and then diverted the money for his own use.
According to the SEC, May, with his daughter’s assistance, offered to buy bonds for his clients, solicited their funds for the investments, and then diverted the money for his own use.
Over the life of the scheme, his clients’ money was used to pay salaries, business and personal credit card bills, a limousine driver, country club dues, home remodeling, travel, personal loans to friends, political contributions, a vacation home, and furs and jewelry for his wife.
May was accused of sending clients fabricated account statements reporting fictitious bond purchases and using the clients’ money to make Ponzi-like payments to other clients who sought to withdraw funds.
As the fake bond purchases multiplied, these account statements inflated the victims’ holdings. For example, an account statement for one client couple, listed a total portfolio value of more than $8.6 million, although the couple had less than $51,000 in assets.
On December 13, 2018, May pled guilty to conspiracy to commit wire fraud, investment adviser fraud, and agreed to forfeit $11.5 million.