A former Pennsylvania broker now in prison for swindling investors out of thousands of dollars through real estate investments has agreed to a Securities and Exchange Commission sanction that bars him indefinitely from the financial investment industry, the agency announced Wedneday.
Frank R. Peperno, 42, of Old Forge, Pa., was sentenced to a 43-month prison term in U.S. District Court for the Middle States of Pennsylvania in 2010 for bilking investors out of an estimated $434,000, according to court documents. His incarceration will be followed by five years of supervised release.
Peperno neither denied nor admitted to the findings against him, but agreed to the terms of the SEC's sanctions.
Peperno was a branch manager in Lackawanna County, Pa., for Linsco/Private Ledger Financial Services from September 2003 to August 2007.
From January 2003 to September 2005, Peperno placed funds from at least nine customers in high-commission REITs by forging customer signatures or otherwise falsifying customer income, net worth figures and investment experience in account application documents that he forwarded by U.S. Mail or other interstate mail carriers to his broker-dealer, court documents said.
The scheme generated Peperno an estimated $54,000 in commissions.
From September 2003 to January 2006, Peperno also fraudulently obtained approximately $380,000 from two customers by claiming he would invest their money in securities. Instead, Peperno converted his customers' funds to his own use and opened a business account at a local bank.
In 2005, Peperno purchased a fitness gym in Kingston, Pa. using $75,000 from that bank account. During that time frame, Peperno also used an estimated $251,000 from the bank account to purchase gym exercise equipment.
Besides swindling investors, Peperno, along with his wife Salli Ann Peperno, 40, were convicted in April 2010 of conspiracy to commit tax evasion for failing to pay $167,402 in income taxes for their jointly-owned gym, Maximum Health & Fitness.
According to court papers, the Pepernos kept two sets of books to conceal cash receipts at their gym.