A U.S. District Court ruling ends the Securities and Exchange Commission's trial court case against former NAPFA chair Mark F. Spangler, now serving a 16-year prison term for swindling clients out of their life savings.

The SEC announced last night that the U.S. District Court in Seattle entered a final judgement on the SEC's lawsuit against The Spangler Group Inc. that enjoins the firm from future violations of securities laws. The assets of the former registered investment advisory (RIA) firm are being liquidated by a court-appointed receiver, who has been distributing the proceeds to its creditors, including Spangler's investment clients, the SEC said in a release.

Kent L. Johnson, the receiver for The Spangler Group, told FA that just under $30 million, net of expenses, has been distributed. That total represents 50 percent of the net cash of $60 million invested by Spangler's clients or investors. "Overall, in terms of these kinds of cases, it was a relatively successful rate of recoveries," Johnson said in an e-mail.

Spangler, formerly of Seattle and 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.

In March 2014, Spangler was sentenced to 16 years in prison and forced to pay $19.8 million in restitution to former investment clients.  

The SEC charged Spangler and his firm in 2012 with defrauding clients by secretly investing their money in two risky start-up companies that Spangler co-founded. The SEC alleged that Spangler funneled approximately $47.7 million of client money into these private ventures, which were inconsistent with the investment strategies that he promised his clients and contrary to their investment objectives. According to the SEC's lawsuit, he concealed his diversion of client funds for years. He disclosed the misappropriation only after he placed his firm and the funds he managed into a state court receivership in 2011, the SEC says.

The U.S. Attorney's Office for the Western District of Washington filed parallel criminal charges against Spangler, who was convicted on 32 counts of wire fraud, money laundering and investment advisor fraud in November 2013.

Spangler served as the chairman of NAPFA's board of directors from 1996 to 1998. In recent years, he was not active in the organization.