A former Pennsylvania advisor has been sentenced to five years in jail and will pay $7.5 million in restitution and a $250,000 fine for his part in an investment fraud scheme, a U.S. Attorney’s Office statement said.
Beginning in 2012 and through 2015, Lee Weiss convinced his clients to invest some $40 million in a now-defunct Florida tobacco company and a series of private securities offerings, according to prosecutors and court documents.
While Weiss said the money would be used for investment purposes, he instead used some of it to fund a lavish lifestyle, including car payments and country club fees. And he continued to charge them management fees, despite the funds being misappropriated, prosecutors said.
The sentencing capped the criminal case brought against Weiss, who had been the principal of Family Endowment Partners, LP, a registered investment advisor in West Chester, Pa., until it was shuttered by the Securities and Exchange Commission in November 2015.
Earlier that year, in April 2015, a successful lawsuit against Weiss and his firm resulted in a $48.5 million award to two of his former clients, whom he had convinced to invest $750,000 in the fraud scheme in 2012, court documents said.
In 2016, Weiss was barred from the industry and ordered to pay a $1 million civil penalty and disgorge another $8.4 million in a settlement of separate SEC charges.