A federal district court in Boston entered a final judgment against Richard G. Cody, 42, a former investment adviser and registered representative, who was charged by the SEC of defrauding Massachusetts’s retirees through an elaborate scheme designed to hide losses as high as 90% of their retirement accounts.

Cody was already sentenced to two years in prison in March 2019, after pleading guilty to parallel criminal charges of fraud brought by the U.S. Attorney for the District of Massachusetts.

Cody, of Jacksonville, Fla., faces two years of supervised release after his prison term. He was also ordered to pay a fine of $30,000. He pleaded guilty to one count of violating the Investment Advisors Act of 1940 and two counts of making a false declaration in a court proceeding.

In granting the SEC a final judgement, the Boston court found that Cody, who moved his firm, Boston Investment Partners, LLC, from Boston to Spring Lake, New Jersey in 2013, but operated his scam into 2016, allegedly defrauded at least three of his retired clients over a twelve-year period.

The SEC detailed instances in which Cody’s clients did not know that their accounts had lost as much as 90%, because Cody allegedly concealed the extensive losses.

“Cody concealed these losses by leading the clients to believe that their investments were maintaining steady value and that the clients were living off income from their investments. By 2014, two of the retirees' accounts had essentially run out of funds,” the SEC said.

While the retirees thought they were securing their futures, they actually became victims of a web of lies and fraud that grew in complexity as their retirement accounts lost nearly all their value, according to the SEC.

In one case, Cody allegedly defrauded  husband and wife clients by telling them that they had $1.28 million remaining in their investment accounts when their retirement accounts held approximately $162,560 due to investment losses he oversaw, according to the SEC.

Other husband and wife clients, such as “Paul and Maureen M.’s retirement accounts,” suffered a similar fate, the SEC said. Under Cody’s management, the value of the couple’s account plummeted to a stated value of approximately $38,000, or approximately 90% less than their starting value, without them knowing it. “In light of this material drop in account value, Cody’s statements to Paul and Maureen M. that their accounts were holding value and that they were on track for a well-funded retirement were deceptive and misleading,” the SEC argued.

Other fraud perpetuated by Cody, according to the SEC, included answering requests from a client for a withdrawal of retirement funds by falsely representing that the client’s funds had been invested in an annuity and then sending the client a fraudulent document to create the appearance that a well-known financial firm held an annuity for that client.

“Cody also sent clients fabricated tax forms which purported to show retirement account distributions and tax withholding in order to disguise the fact that the clients’ accounts were essentially empty,” the SEC said.

Cody allegedly continued to hide retiree client losses by making wire transfers of monthly deposits to the retirees' bank accounts and sending the clients fabricated tax forms. “These deceptive acts caused Cody's clients to believe that their retirement savings were secure when, in fact, they were not,” the SEC said.

The court, which previously ordered a preliminary injunction and an asset freeze against Cody and his Boston Investment Partners LLC, granted the SEC's motion for summary judgment and found that Cody violated antifraud provisions of the Investment Advisers Act and the Securities Exchange Act.

"The sheer duration of Cody's deception deprived these clients of any opportunity to take measures to decrease or to stop their losses or even to work longer to make up those losses, With their prime working years now well behind them, Cody's deceptive scheme has irreparably damaged their financial security, causing immense anxiety and fear and creating the real possibility that they may suffer further dire consequences,” the SEC said.