A former Florida registered rep has been barred from the securities industry after allegedly embezzling more than $260,000 from a client to pay his daughter’s college expenses, to reimburse other clients and to pay his own expenses.
James M. Unger, now of Boca Raton, Fla., formerly of Shaker Heights, Ohio, was barred by the U.S. Securities and Exchange Commission on Tuesday in an administrative proceeding.
The commission’s bar comes after Unger pled guilty to multiple criminal counts of fraud and filing false tax returns in U.S. District Court for the Northern District of Ohio in March.
According to the criminal complaint, between 2006 and 2014 Unger worked as an investment advisor representative, first with Fintegra, then with Hennion & Walsh and finally with Financial America Securities.
During the period in question, Unger allegedly defrauded a client referred to as "E.C." in the filings. The documents say that in 2007, E.C. gave Unger power of attorney over her finances. That same year, Unger began to solicit her to invest in an international casino, assuring her that it was a safe opportunity and promising a 15 percent annual rate of return.
E.C. ended up investing $407,000 in the casino project, according to the criminal complaint. Unger allegedly used her fund for other purposes, including at least $18,000 that was spent on his daughter’s college expenses.
Unger also allegedly used some of the funds to cover up his poor financial advice—in 2003 he persuaded two other clients to invest in annuities. Subsequently, both clients began to take distributions from those annuities before turning 59½ years old, incurring taxes and penalties. According to the criminal complaint, Unger wired funds from E.C.’s accounts to reimburse both annuity clients for their penalties and taxes.
Between May 2010 and October 2013, Unger also solicited at least $89,000 in loans from E.C., none of which were repaid.
When E.C. attempted to recoup her initial casino investment plus returns, which would have been worth an estimated $1.9 million in 2014, there was allegedly no money in her accounts, and her entire investment was lost.
In March, a U.S. District Court sentenced Unger to three years in prison on the criminal charges.