A former LPL advisor faces decades in prison after pleading guilty in connection with a long-running scheme that bilked clients out of more than $2.8 million, according to the U.S. Attorney for the District of Massachusetts.
James Kenneth Couture, 42, of Sutton, Mass., pleaded guilty yesterday to four counts of wire fraud, four counts of aggravated identity theft, one count of investment adviser fraud and one count of witness tampering. He is scheduled to be sentenced on Jan. 11.
Couture was initially charged in connection with this scheme in June 2021, but later engaged in witness tampering by creating fake documents purported to be for his clients’ accounts and providing false information to at least one victim in the case for about six months, prosecutors said. He was charged with witness tampering on Jan. 14.
Authorities said the charges of wire fraud each provide for a sentence of up to 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. The charges of aggravated identity theft each provide for a mandatory consecutive term of two years in prison. The charge of investment advisor fraud provides for a sentence of up to five years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. The charge of witness tampering provides for a sentence of up to 20 years in prison, three years of supervised release and a fine of $250,000.
In a parallel action, the SEC filed civil charges against Couture in connection with the fraud in June 2021.
Couture was fired by LPL in June 2020, and the Financial Industry Regulatory Authority barred him in October 2020 for refusing to comply with its requests for information and documents related to the investigation of the alleged fraud.
Couture, who was a registered investment advisor with LPL from 2009 to 2020, also owned the Private Wealth Management Group (PWMG), which he created in 2010. The business had offices in Worcester and Springfield, Mass.,and provided investment advisory services and sold insurance products. It was not registered with the Securities and Exchange Commission, according to the SEC’s complaint.
Authorities said from about 2009 to December 2020, Couture, while operating PWMG, fraudulently prompted his clients to sell portions or all of their securities holdings to fund large money transfers to Legacy Financial Group LLC, which, unbeknownst to his clients, was owned and controlled by Couture.
Couture, the SEC said, formed Legacy Financial Group (a third-party sub-advisor) in 2009 to “purchase, own and hold ownership interests in other companies.” He also owned and operated CWM Retirement Plan Services LLC, another third-party business that managed the administration of certain employee benefit and retirement plans. The complaint said he used CWM to create fake employee benefits, through which he could filter payments from one client to another and give the false impression that the payments were part of an employment relationship.
Authorities said Couture misappropriated about $2.8 million from the six clients by transferring funds from their accounts, investing it in fictitious mutual funds and then selling other clients’ holdings to pay investment returns.