SEC Bars Longtime Broker Who Pled Guilty to Defrauding Retail Investors
The Securities and Exchange Commission has barred a Connecticut investment adviser after he pleaded guilty last month to one count of wire fraud for misappropriating $575,000 from three advisory clients.
The Securities and Exchange Commission has barred a Connecticut investment adviser after he pleaded guilty last month to one count of wire fraud for misappropriating $575,000 from three advisory clients by selling fictitious financial products and using the proceeds to pay other advisory clients, as well as for his own use.
According to the SEC’s complaint, Lester W. Burroughs defrauded the retail investors from at least November 2012 to January 2019. He allegedly told his clients that he would invest their money in guaranteed interest contracts with annual returns of 4 percent or 7 percent, however, the SEC claims that Burroughs never invested his clients’ money and instead provided clients with fake account statements.
Burroughs has been registered as a broker since 1969 and as an investment adviser since 1978. He was most recently affiliated with Lincoln Investment Planning, which fired him last month, and also served as an investment adviser representative with Capital Analysts.
According to the complaint, Burroughs allegedly sold the first investor, an elderly client, four separate fictitious guaranteed interest contracts totaling approximately $370,000. The SEC claims that bank records show that Burroughs misappropriated the money and used it for part of a payment to another client, insurance policy payments for other clients, his personal expenses, and small “interest” payments back to the first client.
When a relative of the elderly client began to ask Burroughs to explain these investments, he supposedly created and sent a fake statement from a well-known insurance company.
The SEC claimed that the statement showed the client had a guaranteed interest contract that paid 4 percent interest and was worth approximately $152,000. When Burroughs was pressed by the relative to return the invested money, he allegedly convinced three other investment advisory clients to invest so that he could pay the money back.
The three clients invested approximately $560,000, some of which he used to repay the original client approximately $445,000, which reflected the principal invested plus 4 percent annual interest.
Prior to Lincoln Investment Planning, Burroughs was affiliated with the now-expelled Brookstone Securities, Woodbury Financial, Tower Square Securities, and Price Securities, among others. According to his Brokercheck profile, he had 14 customer disputes since 1996 and was fined $1000 by the Connecticut Insurance Commissioner in 2003.
