The home of a Seattle-based investment manager, Mark F. Spangler, a high-profile name in the financial planning world, has been raided by FBI agents in search of records that could tie him to defrauding clients out of as much as $46 million. According to published reports, the SEC is also investigating the matter.
Spangler served as president of the National Association Of Personal Financial Advisors (Napfa) in 1999 and was seen as an honest and popular figure in the profession who some advisors liked to consult about ethical dilemmas. Operating in the Seattle area, Spangler claimed to have served a clientele that included employees who earned windfalls at successful companies like Microsoft and Starbucks who might seem naturally drawn to start-up investments.
Spangler and his firm, The Spangler Group Inc., went into receivership earlier this year when he could not pay the bills connected with his company. Court documents show he is the subject of an FBI investigation for allegedly defrauding clients.
No charges have been filed and the FBI does not confirm details of investigations or whether an investigation is ongoing. But The Seattle Post-Intellingencer reported that, according to recently unsealed law enforcement statements, Spangler is now the subject of FBI and SEC fraud and money laundering investigations.
Spangler is cooperating with authorities, according to his attorney, Ronald J. Friedman of Lane Powell PC, a Seattle law firm.
Spangler's firm had reported having $106 million under management at one point but more recently reported approximately $60 million in assets. He had allegedly taken clients' money and invested in start-up companies, including some he had ties to, rather than putting the money in safe investments as he had told the clients. Some of the money was lost when the start-up companies collapsed.
"Mr. Spangler regrets this turn of events in regard to his business and intends to fully cooperate with authorities in their on-going investigation. He is taking steps to address the matter with the investors," Friedman said. "We are at the front end of this investigation and that is all I can say now."
As early as 2000, Spangler talked openly at industry events about investing his own money with that of clients who had come out of companies like Microsoft and Starbucks in start-up ventures. At Napfa's annual conference in Minneapolis that year, he described his firm as something of a co-op and said eventually he envisioned his clients buying his firm. While the strategy appeared outside the mainstream of the profession, it also sounded perfectly plausible that his clients who had earned significant amounts of wealth in start-up ventures would feel comfortable continuing to make these kinds of investments.
But according to other reports and unnamed FBI agents quoted in The Seattle Post-Intelligencer, Spangler had indicated to clients he was investing their money in relatively safe, diversified funds concentrated in publicly traded securities. Instead, he is alleged to have placed much of the money into TeraHop Networks in Georgia, an inventory-tracking maker that he bought, and Tamarac Inc., a well-known portfolio accounting software maker in Seattle popular with some financial advisors, where he was chairman and director, as well as other companies. Tamarac remains a going concern and received an award from Microsoft today. TeraHop went out of business earlier this year, reportedly after vaporizing more than $20 million.
Spangler, 56, a national spokesman on financial issues, apparently invested the money as the clients directed until about 2004, according to reports. But then he allegedly changed the investment company bylaws without the consent of the investors. He eventually told clients the funds had been moved and money lost, sources said.