A former chair of the National Association of Personal Financial Advisors has been convicted by a federal jury in Seattle of defrauding clients out of nearly $50 million, the U.S. Attorney for the Western District of Washington announced.

Mark F. Spangler, 58,  formerly of Seattle but now of Portland, Oregon, was convicted of 32 counts, including wire fraud, money laundering and investment advisor fraud, said U.S. Attorney Jenny A. Durkan on Thursday.

Spangler, who served as Napfa Board of Directors chairman from 1996 to 1998, was charged with promising his clients that he would protect their life savings by investing it in safe investments. Instead, he diverted their money, without their knowledge or consent, to two risky start-up companies that he controlled and in which he had a significant financial stake, the attorney general said.

Spangler, who managed assets for a number of wealthy Microsoft employees in the 1990s was widely known in the RIA business. Fellow advisors knew he fancied himself as something of a venture capitalist.

What made the charges against him so startling was that while he apparently failed to disclose to clients his VC-style investments, he spoke openly about it at a Napfa meeting in Minneapolis in 2000. While most of his start-ups failed, Tamarac, a software rebalancing and aggregation tool for advisors, was a highly successful business and was sold to Envestnet for more than $54 million in February 2012.

After Spangler's misdeeds were uncovered during an FBI raid of his house in September 2011, he resigned as Tamarac chairman. In requesting a search warrant that month, the FBI claimed it was urgent, since Spangler was planning a vacation to Ecuador on September 25.

The U.S. Attorney maintained Spangler's clients had no inkling that their funds were being channeled into start-ups. “Mark Spangler gambled with other people’s money without their knowledge – he defrauded friends and family members who trusted him with their life’s savings,” Durkan said. “This defendant used his position of trust as a tool to cheat his clients out of money for their mortgages, their children and grandchildren’s education, their retirement and plans for charitable giving.”

The evidence during the three-week trial demonstrated that Spangler, through his company, The Spangler Group, repeatedly violated his fiduciary duty as an investment advisor by hiding where his clients’ money was invested, and by providing them with false account statements, Durkan said. He told his clients that their assets were worth over $73 million. However, after he ran out of money and put his business into receivership, only approximately $28 million was recovered for the victims, resulting in a loss of approximately $50 million.

Durkan said when some investors sought to liquidate their holdings, Spangler ran a Ponzi scheme using new money from investors to pay off the other investors. Spangler used clients’ money, fees he charged clients and money from the start-up companies to live a life of luxury, including traveling the world and buying a million dollar home, an $890,000 yacht, and a $20,000 engagement ring, Durkan said.

Sentencing has been set for Feb. 6.