A former North Carolina financial advisor was sentenced to at least 16 years in prison for swindling elderly clients, including his father, out of $3.3 million, according to a news release from the North Carolina Department of the Secretary of State.
Russell Joseph Mutter, 52, of Clemmons, N.C., was arrested in May 2018 and charged with 41 counts of investment advisor fraud, financial exploitation of an older adult, and obtaining property by false pretenses. Forsyth County Superior Court Judge David Hall condensed Mutter’s charges into three Class C felony counts, sentencing Mutter to a minimum of 16 years and three months and a maximum of 22 years and five months in prison for the scam.
Mutter will get credit toward this sentence for time served since his arrest, the release said. He has been in custody since his indictment in May 2018.
According to court documents, between January 2009 and December 2017, Mutter, who previously worked for Charles Schwab, founded RJM Financial in 2010. He solicited a client who transferred $500,000 to RJM so that Mutter could manage his investment. The complaint said he recommended to the client that he would invest in “blue chip” bonds and U.S. Treasury Inflation Protected Securities (TIPS). He told the client that he purchased one Caterpillar bond and four TIPS bonds, each for $100,000, with a maturity date of 2014. He also promised the client that he would receive annual statements.
But the complaint said between 2010 and 2014 the client received only one statement for the Caterpillar bond and none for the TIPS bonds. As it turned out, the statement was bogus, the complaint said. The client did recover $105,000 each for the Caterpillar bond and one of the TIPS bonds. When he inquired about the $300,000 for the other three TIPS bond, Mutter was unable to account for the client’s money, the complaint said.
The client filed a civil lawsuit against Mutter in 2017. The complaint said in responding to the lawsuit, Mutter admitted that he did not invest in the TIPS bonds rather he invested in a series of S&P 500 Put Options, which he claimed had declined in value. Therefore, he was unable to return the $300,000.
The complaint said Mutter also admitted to attempting to raise money through investments to pay back the client and that it was his plan to fully replace the lost funds. Mutter’s statements, the complaint said, “strongly suggest” that he continued to recruit new investors to recover the funds.
The complaint said the state’s Securities Division was aware of additional clients who suffered similar losses through their investments with Mutter. In February 2018, a temporary cease-and-desist order was issued against Mutter and RJM Financial. A final order was issued in April 2018 permanently revoking his license to act as an investment adviser in North Carolina.
In the end, Mutter defrauded 12 victims in Forsyth County and outside of the state out of $3,339,047.23 between January of 2009 and December of 2017, the complaint said. He dipped into his clients’ accounts without their authorization, invested some of their funds in high-risk securities without their knowledge, and misused their funds. It said he hid the losses by fabricating fraudulent account statements, the complaint said.
Mutter’s attorney, Chris Beechler, was not available for comment.