A former investment advisor and broker from Lilly, Pa., pleaded guilty to securities fraud and other charges for operating a multi-million scheme that defrauded elderly and vulnerable clients, U.S. Attorney for the Western District of Pennsylvania Scott W. Brady announced Friday.
Douglas P. Simanski, 53, pleaded guilty to five counts of securities fraud, wire fraud and filing false income tax returns before United States District Judge Kim R. Gibson. He hid his activities from law enforcement in part by opening accounts in his wife’s name, the Securities and Exchange Commission said in a parallel complaint filed Friday.
Between February 2002 and May 2016, Simanski, a registered representative working in Altoona, Pa., fraudulently obtained $4.5 million from at least 27 investors, many of them elderly and retired. To carry out the scheme, he fabricated “Tax Free Investment” contracts and fake certificates of deposit, which listed guaranteed rates of return to convince clients to invest, Brady said in a statement.
Simanski used portions of the invested funds to pay “returns” to other investors to make it appear their investments were legitimate. He also used a portion of the funds to purchase personal items and to fund personal home improvement projects, and placed some of the funds into a personal e-Trade account, according to court papers.
He told clients he was investing their money in a rental car company or one of two coal mining companies in which Simanski claimed to have an ownership interest. He allegedly told the investors to write checks payable to personal bank and brokerage accounts he opened in his wife's name, the SEC complaint said. According to the SEC, Simanski's scheme collapsed when one of his clients contacted Finra and Simanski admitted his scheme to his employer.