Former Napfa Chairman Mark Spangler has been sentenced to 16 years in prison for what the court described as “a complete betrayal” that cost his clients millions in life savings.
Spangler, once a nationally prominent advisor quoted by the likes of The Wall Street Journal and The New York Times, was sentenced in U.S. District Court in Seattle on Thursday.
U.S. District Court Judge Ricardo S. Martinez said at sentencing that Spangler touted his ethics and then “used his clients’ trust against them,” according to a press release by the Federal Bureau of Investigation.
“It was a complete betrayal in the worst possible way,” Martinez said. “He became willing to lie, cheat and swindle those same clients he described as friends and family.” Martinez also cited Spangler's lack of remorse as a reason for the stiff sentence.
In addition to the 16 years in prison, Spangler was ordered to serve three years of supervised release and pay $19.8 million in restitution on 32 criminal accounts, including wire fraud, money laundering and investment advisor fraud.
Spangler served as Napfa Board of Directors chairman from 1996 to 1998. In recent years, he was not active in the organization. He was convicted in November for losing millions in client funds after secretly diverting the money into two of his own start-up ventures. He then attempted to cover up the crime by lying to clients in a Ponzi scheme that ended with his declaring bankruptcy in 2011.
Spangler, who managed assets for a number of wealthy Microsoft employees in the 1990s, was widely known in the RIA business. 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.
Reports have put the losses to clients at up to $50 million, but after the assets recovered through bankruptcy proceedings are included, the losses appear to have been between $18 million and $20 million, according to the Seattle Post-Intelligencer.
Federal public defender John Carpenter asked the judge to treat Spangler with leniency, calling him a "good man" while asking for a five-year sentence, according to the newspaper. Carpenter reportedly told the judge the 58-year-old Spangler would die in jail. After the sentencing, prosecutors said one of the most startling aspects of the Spangler case was how the advisor betrayed those who placed their trust in him as a fiduciary.
Many of his victims were long-time friends and associates, prosecutors have noted, and the money he lost represented lifelong savings earmarked for retirement, children’s education and charitable giving. The prosecution indicated that in the eight months before the FBI started questioning Spangler, he spent $40,000 on boating.