SEC Charges Former LPL Broker with Defrauding Retail Investors in Ponzi Scheme
The Securities and Exchange Commission has charged a former LPL Financial broker with operating a Ponzi scheme that defrauded more than three dozen retail investors, including senior citizens saving for retirement, of nearly $4 million in assets.
The Securities and Exchange Commission has charged a former LPL Financial broker with operating a Ponzi scheme that defrauded more than three dozen retail investors, including senior citizens saving for retirement, of nearly $4 million in assets.
According to the SEC, from at least August 2014 to June 2019, James T. Booth, while operating an investment advisory and brokerage business, made false promises of safer investments and higher returns to convince his investment advisory clients and brokerage customers to move assets out of their ordinary accounts.
Booth spent less than one year at LPL before he was fired in May 2019 for misappropriating “multiple clients’ funds for his personal and business use.” Prior to LPL, he spent 12 years with Invest Financial Corporation, and another 12 years at Cadaret, Grant & Co. before that. According to his BrokerCheck profile, Booth has 19 pending customer disputes since the end of June 2019.
The SEC claims that Booth allegedly deposited investors’ funds into a bank account of an entity he controlled, and then moved the funds into his personal accounts and used them to pay for business and personal expenses, including meals, entertainment and numerous trips to casinos.
According to the complaint, Booth supplied his clients with detailed false account statements showing securities that he purportedly purchased on their behalf, many of which showed gains over time from the fictitious investments.
The complaint alleges that when investors asked to redeem some or all of their investments, Booth provided investors with Ponzi-like payments, using assets from new investors to pay back old investors.
“Booth’s Ponzi scheme began as early as 1999 and resulted in Booth defrauding investors out of as much as $10 million,” the complaint states. “By virtue of his scheme, Booth misappropriated approximately $3.9 million dollars from approximately 40 investors between approximately August 2014 and June 2019.”
The SEC is seeking a permanent injunction from future violations of the securities laws, disgorgement and prejudgment interest, and a civil monetary penalty. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Booth.
