The SEC has charged a former LPL Financial advisor with swindling nearly $1.3 million from an elderly client with dementia and using the funds to pay credit card debt, income taxes and other personal and business expenses.
The alleged theft took place over an eight-year period and the female client, 97, of Yorkville, Ill., now suffers from dementia and lives in a memory care facility, the SEC said.
According to the complaint, filed in the U.S. District Court for the Northern District of Illinois, Bradley A. Goodbred, 54, a resident of Plano, Ill., induced his client from at least 2012 to 2020 to transfer money to one of his businesses, Northern Lights Properties LLC, to make purported investments in real estate investment trusts (REITs) on her behalf.
The SEC said that the client, on the advice of Goodbred, moved funds from her trust account to her bank account. She wrote a total of 10 checks and one money order totaling $1,295,000 to Northern Lights. The SEC said Goodbred on occasions directed the client to sell securities in her account and transfer the proceeds to him.
Goodbred, the SEC said, initially received the funds in his bank account for Northern Lights, but within days would move most of it to his personal bank account. He did not invest the client’s money in REITs or any other investments on her behalf, t he SEC said.. Instead, the SEC said, he used the client's money for credit card debt for himself and his wife, income taxes, auto loans and other personal expenses.
The elderly woman, the SEC said, had been a longtime client of Goodbred, whom she met more than 20 years ago through her husband, who died in 2006. The SEC said that when her husband died, Goodbred “positioned himself as a friend and confidant to the client who lived alone, and whose children had predeceased her.”
The complaint said that Goodbred was appointed by the client in 2013 “in varying roles of control and influence over her financial and health matters.” He also was appointed investment advisor for her trust account and subsequently as power of attorney over her property and health, the SEC said.
The SEC said Goodbred was a fiduciary obligated to act in the client’s best interest, to act in good faith and to disclose all material facts affecting the advisory relationship to his clients.
Goodbred’s fraudulent scheme began to unravel after a successor trustee met with the client to get financial information and became concerned that her cognitive skills were in decline, the complaint said. It said the successor trustee then hired a professional care manager for her, but Goodbred subsequently terminated the agreement with the care manager and revoked the trustee’s request for a medical examination for the client. He also ignored multiple requests from the trustee for copies of the client’s bank statements. The client maintained 11 accounts with LPL at varying stages with Goodbred, the complaint noted.
The SEC said LPL received a complaint in November 2020 that Goodbred “might be exercising inappropriate discretion over the client’s trust account.” LPL investigated the complaint and Goodbred was fired in January 2021. The Financial Industry Regulatory Authority barred him in February 2021 for failing to cooperate with the investigation into his firing from LPL.