SEC Obtains $1.1 Million Judgment Against Former Broker
An Ohio federal court entered a consent judgment against John Gregory Schmidt, a former registered representative of Wells Fargo Advisors Financial Network and Stifel, Nicolaus & Company.
An Ohio federal court entered a consent judgment against John Gregory Schmidt, a former registered representative of Wells Fargo Advisors Financial Network and Stifel, Nicolaus & Company.
Schmidt, the owner of Schmidt Investment Strategies Group in Washington Township, Ohio, was accused of conducting a million-dollar Ponzi scheme that transpired between 2003 and 2017. Most of the customers were reportedly elderly with little to no financial expertise. He spent nearly 11 years at Wells Fargo Advisors Financial and was previously affiliated with Stifel Nicolaus from 2002 until 2006.
The SEC’s complaint, filed in September 2018, alleged that Schmidt sold securities belonging to at least seven of his retail brokerage customers and secretly transferred over $1 million in proceeds to at least 10 other customers to cover shortfalls in the customers’ accounts.
He was also accused of making unauthorized sales and withdrawals from customer accounts, secretly transferring funds using fraudulent letters of authorization, and issuing fake account statements. Schmidt received more than $230,000 in brokerage commissions from the transactions.
Irregularities found by the Ohio Department of Insurance triggered an investigation that was conducted with the Ohio Department of Commerce.
Without admitting or denying the allegations, Schmidt was ordered to pay disgorgement of $236,000, prejudgment interest of $35,000, and a civil monetary penalty of $864,000. He also consented to the entry of a final judgment that enjoins him from violating certain sections of federal securities laws.
