An investment advisor and broker who has operated in New Jersey and Massachusetts was hit with a temporary court bar and asset freeze Thursday after the Securities and Exchange Commission alleged he had hid from three elderly clients that he drained their retirement savings for over a decade.
Spring Hill, N.J., resident Richard Cody, 42, continued the fraud even during a one-year Finra broker suspension, the SEC contended.
Cody reportedly hid the suspension from his clients, as well.
The injunction and asset freeze were put in place by a federal district court judge in Massachusetts.
In one instance, the SEC claimed Cody told a widow two weeks after her husband’s death there was $420,000 in their accounts when they were worth about one-tenth.
Another time, he informed an elderly customer his accounts were worth $498,000 when the true figure was $43.
After a third client rolled over $585,000 in retirement funds to brokerage accounts managed by Cody, the alleged offender reportedly told the client and his wife 12 years later the accounts were worth $1,256,000. They held a million less.
When one of the clients asked for money from the investor’s retirement funds, the SEC claimed Cody falsely said the money could not be made available because it was in an annuity.
As phony proof of the value of their assets, Cody gave the seniors fake account statements, tax records and wire transfers of monthly deposits to their bank accounts from other sources.
This is not the first time Cody has run into problems with securities industry regulators.
Cody was fined and given a one-year suspension by Finra as the result of a 2008 complaint for excessive and unsuitable trading and for substantially overstating the value of accounts for clients and told them he had bought them securities that did not exist.
The suspension came five years after the original complaint was filed because of Cody’s actions to stop the penalties, which ultimately failed because of a United States Court of Appeals for the First Circuit decision against him.
However, according to the SEC, the suspension did not stop Cody’s frauds against his senior victims.
The SEC’s court filings contend Cody continued to conduct his brokerage and investment advisor business through his then-wife, who was a broker.
“Cody orchestrated this arrangement to indirectly provide brokerage services during the period of his suspension from the securities industry in order to, among other things, prevent his clients from learning that he had been disciplined and to avoid any break in his dealings with his clients -- which would have revealed his massive deceptions about the value of their retirement accounts,” SEC attorneys said.
SEC Alleges Suspended Broker Continued To Scam Retirees
December 23, 2016
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