A former Transamerica representative and investment advisor who was charged with defrauding retail investors has been ordered by an Ohio federal judge to pay more than $747,000 in disgorgement and other penalties, according to a news release.
Scott Allen Fries, 56, of Piqua, Ohio, was charged by the Securities and Exchange Commission of raising at least $458,000 from at least 10 investors, including some of his brokerage customers, and lying to them about their investments.
The SEC complaint said that between March 2014 to July 2019 Fries was employed by Transamerica Financial Advisors as both a registered representative and an investment advisor representative. In January 2016, he began soliciting and receiving funds from some of his brokerage customers and other individuals, the complaint said, adding that he collected at least $458,000 for investments in securities by March 2019.
The complaint said Fries deposited the money into his own bank accounts. Within days of receiving the investors’ money, Fries began using it to pay for personal expenses such as mortgage payments, payday loans and credit card bills, the complaint said.
To hide his fraudulent activities, the complaint said, Fries created and sent bogus account statements to certain investors and used funds from later investors to make a Ponzi scheme payment to an investor couple who discovered that Fries had been sending them phony account statements. He also lied to his employer about his activities with investors and failed to disclose the full scope of his fraud, the complaint said.
Transamerica fired him in July 2019 and in November 2019 he was barred by the Financial Industry Regulatory Authority for refusing to cooperate in an investigation.
Fries had been in the industry since 1992. He worked as a registered representative with various firms until 2019, according to BrokerCheck. He was with NYLife Securities for five years before joining Transamerica in 2014.
U.S. District Court for the Southern District of Ohio entered the default judgement against Fries, which enjoined him from violating the antifraud provisions of the federal securities laws. He was ordered to pay disgorgement of $428,334.53 plus prejudgment interest of $110,548.02 and a civil penalty of $208,500.