The Securities and Exchange Commission filed charges against Georgia-based Jay Costa Kelter, a former investment adviser and broker representative, for defrauding three retired clients out of more than $1.8 million.
According to the SEC’s complaint, from September 2013 through 2016, Kelter made misrepresentations to three clients and used their money to fund expensive purchases for himself.
When Kelter left his former employer Berthel Fisher & Company Financial Services in 2013, he allegedly convinced the three seniors to move their accounts to a new brokerage firm so he could continue to provide investment advice and trade on their behalf. The clients opened new accounts at TD Ameritrade and gave Kelter access to the accounts.
As alleged in the complaint, Kelter sold securities in two of his clients’ accounts to make unauthorized payments to his company BEK Consulting Partners LLC. He falsely told the two clients that BEK was a company that he was investing in on the clients’ behalf.
However, the SEC said that Kelter used the misappropriated client funds to purchase a luxury Bentley automobile, and pay for a family vacation and other personal expenses. In addition, he used one client’s funds to return money to another client, and also used the funds for futures and options trading in unrelated accounts.
Kelter allegedly guaranteed a third client that he would cover his trading losses up to $200,000, inducing the client to allow Kelter to continue to trade in his account. He falsely told that retiree that he had substantial assets and access to personal funds to fulfill his guarantee when, as alleged, he had no such financial resources.
The SEC is seeking civil penalties, disgorgement of ill-gotten gains plus prejudgment interest, and permanent injunctive relief. The U.S. Attorney’s Office for the Middle District of Tennessee also announced an action against Kelter with respect to one of his clients.