The chief executive officer of the Maddox Group in New York City has pled guilty to two counts of wire fraud and one count of lying to the IRS after he cheated clients out of hundreds of thousands of dollars and failed to pay his employees’ contributions into their 401(k) plans, according to the U.S. Attorney's Office.
Adam Gerard Belardino made the pleas today before Judge Judith C. McCarthy of the U.S. District Court in White Plains, N.Y., according to a press release issued today by the U.S. Attorney's Office for the Southern District of New York. Two of the counts carry maximum sentences of 20 years in prison. He faces up to five years in prison for lying to the IRS.
In 2019, Belardino persuaded a client of his previous firm to liquidate $313,000 from her portfolio and transfer it to Maddox Group for investment. But instead of investing the funds, he used them to cover his own office expenses, including payroll and rent, as well as to pay for his own personal travel and credit card charges, according to his guilty plea.
Belardino founded Maddox in July 2019. According to its LinkedIn page, the business "equips clients with unique insurance strategies that have drastically disupted the traditional insurance model."
In September of last year, the client told Belardino to move her portfolio at Maddox to another firm (Belardino valued the client’s Maddox funds at some $730,000, according to the original government complaint). While he told the victim and her family that he was liquidating assets and moving them from September 2021 to February 2022, provided documents saying transfers were imminent and that he had wired funds to the client’s bank and deposited checks for the full amount, the client didn’t receive the funds by wire and the checks Belardino deposited were returned.
The second plea relates to Belardino’s work with a life insurance client. Prosecutors said the client already had a policy whose face value had grown to $18 million, but Belardino took out two additional policies without the client’s knowledge and added millions of dollars to their face value by using the client’s funds to pay the premiums.
“In or about April 2020 and January 2021, respectively, Belardino applied for two additional life insurance policies with a face amount of $3 million and $5 million on behalf of [the second victim without their] knowledge or authorization,” said the U.S. Attorney’s Office in today’s announcement. “While applying for these policies, Belardino made materially false statements regarding Victim 2’s income, net worth and health. In or about August 2020 and May 2021, respectively, Belardino increased the face amount of one insurance policy to $6 million and the other to $12.1 million, again without Victim 2’s knowledge or authorization. He additionally paid and attempted to pay the policy premiums of $194,280 and $105,000 with Victim 2’s funds, and ultimately received approximately $197,497 in commissions from the two insurance companies.”
Belardino also withheld $8,000 from the paychecks of four staff members that was supposed to be contributed to the Maddox Group’s retirement savings plan launched in January 2020 (and for which he was trustee). Instead of depositing the funds in the trust account, he converted them to his and the Maddox Group’s use.
Belardino was arrested in April.
He was terminated by MML Investors Services (Massachusetts Mutual Life’s broker-dealer) in March of 2019 for customer disputes, and the Financial Industry Regulatory Authority barred him in September 2021 for failing to testify in a Finra investigation prompted by his firing.