A barred broker has been charged by the SEC with looting more than $186,000 from three elderly clients and using the money for dating and adult websites and a divorce lawyer, according to a news release.
The U.S. Securities and Exchange Commission said Bradley Morgan Holts, 52, of Beaumont, Texas, while a registered representative with World Capital Brokerage Inc. in Denver, stole the funds from the clients of the broker-dealer from October 2020 to July 2021.
The SEC's civil complaint, which was filed yesterday in the U.S. District Court for the Eastern District of Texas, accuses Holts of violating the antifraud provisions of the securities laws. The agency has asked that its action against Holts be tried by a jury. It seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and a civil penalty.
Holts, who was barred from the industry by Finra in 2021, could not be reached for comment.
The complaint said Holts met the investors while working for a broker-dealer affiliate of their bank. That affiliate, according to BrokerCheck, is Capital One Investing LLC, where Holts worked from 2015 to 2018. He was with Capital One Investment Services LLC from May 2014 to January 2015. The complaint said he convinced the investors to use him as their broker, including when he joined World Capital Brokerage.
Upon receiving their applications and funds in the summer and fall of 2020, the complaint said he opened investments accounts for them with investment management firm Invesco Ltd. The investors had a combined total of $1.9 million from February through May 2021 that Holts invested in Invesco mutual funds via purchases he made as their broker.
The complaint said that in February 2021 Holts opened a bank account in the name of “Bradley Morgan Holts d/b/a Invesco Investment Texas” (IIT) and listed the contact address as his home in Beaumont. He had sole control of the account, the complaint said, noting that the IIT d/b/a name he used deceptively resembled Invesco’s name. But Invesco had no relationship to IIT or control over the IIT bank account, the complaint said.
Holts further misled the three clients into believing that additional investments through him would be added to their existing Invesco mutual fund, the complaint alleged. Two of the three investors, a 90-year-old and a 70-year-old client, who also lived in Beaumont, turned over cashier’s checks to Holts for $17,575 and $10,000, respectively, the complaint said.
The third investor, a 77-year-old woman from Orange, Texas, turned over two cashier’s check totaling about $158,807. That amount represented the difference she needed to bring her account balance to $1 million to avoid sales charge adjustments on her Invesco mutual fund purchases. The complaint said that Holts was aware that the client had previously entered into a letter of intent that stipulated that if she increased her investment to $1 million within a certain time period, she would avoid incurring an additional sales charge on her purchase of the mutual fund shares. She had about $850,000 in the Invesco account, the complaint noted.
Holts did not use any of the investors’ funds to buy Invesco mutual funds on their behalf, the SEC said. He instead deposited the checks in his IIT account for his personal use, the complaint said, adding that the checks he received from the investors made up about 99.7% of the deposits into the IIT bank account between February and November 2021.
The complaint said he withdrew more than $76,000 in cash and used additional funds to pay his personal expenses, including for clothing, tanning salons, adult and dating websites, and a $5,000 payment to a divorce lawyer.
In total, Holts robbed the clients of $186,382. Additionally, the third investor incurred about $17,150 in sales charge adjustments that would have been avoided had he invested the funds as promised, the complaint said.
Holts was fired in July 2021 by World Capital Brokerage for not cooperating with a Financial Industry Regulatory Authority investigation relating to violation of his firm’s supervisory procedures. That same month, Finra barred him for failing to respond to its requests for information.
He began his career in 2010 with Edward Jones and left in 2014 to join Capital One Investment Services.