The Securities and Exchange Commission has imposed a fine and a cease-and-desist order against Lewis J. Hunter for defrauding elderly clients of over $300,000.
In September 2010 and February 2011, the SEC found that Hunter recommended to two long-time elderly clients that they make a $250,000 investment in a Canadian bank. Hunter repeatedly assured the clients that the investment was guaranteed and provided the clients with Guaranteed Investment Certificates (GICs) from the bank. The GICs were purportedly issued by HSBC Bank Canada and guaranteed 15% monthly interest payments for two years.
However, Hunter fabricated the GICs and used the clients' money to pay various personal and business expenses, the SEC says. In addition, Hunter used the clients' own funds to make the 15% interest payments the clients expected to receive from the investment. Hunter also used the clients' own funds to repay a personal loan the clients had made to Hunter.
In a separate instance, Hunter persuaded a third long-time elderly client to make a $54,000 investment in U.S. Bank, the SEC found. Hunter guaranteed the client that he would not lose any money. However, Hunter never invested the money and instead used the funds to repay the personal loan he had taken with the first clients and for other personal and business expenses.
Hunter, of Detroit, was a registered representative with broker-dealer HD Vest Investment Securities at the time.
Hunter must pay a total of $465,172.84 to the SEC, which includes interest and a civil penalty in the amount of $150,000. The SEC has also barred Hunter from association with any broker-dealer or investment advisor. Hunter has consented to the penalty without admitting or denying the findings.