In 2021, the Wealth Enhancement Group, a Minneapolis-area powerhouse wealth management aggregator with $55 billion in assets, boasted that it had acquired a California hybrid wealth advisory whose founder had deep ties to her community in Santa Maria. Now, Wealth Enhancement is accusing her of being a thief.
The firm was Vivid Financial and it was led by Julie Darrah, a pillar of her community, known as a property owner, the board chair of a local senior center and a patron of small businesses such as delis. Darrah is the kind of advisor they talk about when giving examples of personalized care—someone who would take clients to the doctor and hair appointments. Her firm reportedly brought $674 million in assets onto the Minnesota aggregator’s platform.
“For vulnerable clients, Darrah was more than a financial advisor,” says the Wealth Enhancement Group in a recent court document. “She spent many years—for some clients, over a decade—gaining their trust by incrementally inserting herself into their lives as ‘the daughter they never had.’”
Fast-forward a year and a half later, and now the aggregator is is suing Darrah, alleging that she preyed on elderly clients, stealing millions of dollars from them.
In a major lawsuit filed Friday in the U.S. District Court in Minnesota, the company claims Darrah spent years moving client money into accounts she controlled—and that she hid that control from huge banks and custodians and from the Wealth Enhancement Group itself before the aggregator bought her firm.
The company first suspended her, then in mid-September fired her from her role as senior vice president and advisor.
The lawsuit includes explosive charges: It says that Darrah impersonated clients when talking to banks; moved money across accounts; forged checks and client documents; used her own email and personal phone to authenticate transactions; intercepted client mail to hide the fact she had changed addresses and phone numbers on client trust accounts to her own; used a disbarred attorney to prepare documents appointing her as trustee for clients; and falsified Vivid’s books to hide her role as client trustee. She told subordinates not to contact the clients in question because she had special relationships with them, the lawsuit claims.
“Darrah hid all of this from trusting clients, including several in their 80s, and at least one who resides in a memory-care facility where the administration reportedly requires Darrah to approve visits, even by other family members,” says the lawsuit. The firm said she was able to avoid detection because she focused on vulnerable older people who had come to treat her like family.
“Darrah covered her tracks by ingratiating herself into her clients’ family affairs, visiting them at home and assisted living facilities, counseling them as they grieved, accompanying them on medical appointments—all in ways that ran afoul of financial advisor professional boundaries,” the Wealth Enhancement Group claimed.
Furthermore, Wealth Enhancement Group said Darrah hid many of her outside business activities from her new owner, including a deli, a bakery, a sausage company and a concrete company, as well as property ownership and management.
“In an effort to keep these [businesses] afloat,” the lawsuit says, “Darrah has purportedly ‘loaned’ her failing OBAs around $3.6 million, which she apparently has been funding with money that she has been stealing from clients since before the Vivid transaction.”
The company says all these hidden activities led Vivid to trip into stark misrepresentations in its asset purchase agreement with the Wealth Enhancement Group, especially Darrah’s role as a trustee for her clients and her control over their money.
The firm said that in its initial due diligence it found records showing what seemed to be above-board transfers from client accounts. But in fact, the transfers were to third-party bank accounts that Darrah controlled. “It was not until the funds were in that third-party account, completely outside of WEG’s visibility, when Darrah again transferred funds to an undisclosed account that Darrah herself owned,” said the lawsuit.
The suit says much of the illicit activity had been going on since 2016 and had been focused on a few clients—and that most of the activity had gone on before the acquisition.
Wealth Enhancement Group mentions in its suit two clients of Darrah’s, widows in their early 80s. One of them, an 83-year-old with dementia, had been a Vivid client since 2012. The bank’s address for this client, however, was not her care facility but an address of a property owned by Darrah through the trust. “Since 2017, around $1.4 million has been withdrawn from [the client’s] accounts, which WEG believes was withdrawn by Darrah or at Darrah’s direction and for her benefit,” the lawsuit states. In March 2021, the suit states that Darrah created a new account outside Wealth Enhancement Group’s visibility and told subordinates it was created to help the client’s daughter buy a house. “This, in fact, was a bank account with Community Bank of Santa Maria that was controlled by Darrah and that she used to conceal transfers from [the client’s] Vivid account directly to her own account.”
The lawsuit also said Darrah removed tens of thousands of dollars from the second client’s account and moved them into accounts she controlled. These monies eventually made their way into the accounts of Darrah’s outside businesses, the lawsuit claims
The company said it received an inquiry from regulators about Darrah’s client relationships in July of this year. The Wealth Enhancement Group launched an investigation, it said, but Darrah did not cooperate and the firm eventually fired her for cause.
Darrah did not return a phone call or LinkedIn message from Financial Advisor.
The Wealth Enhancement Group sent a statement to the magazine: “Because the legal case is ongoing, we are limited in what we can say. However, we can confirm that the advisor in question has been terminated for cause. We are conducting a thorough internal review with support from outside legal counsel and external experts and are cooperating with government authorities in their review of the matter. The safety and security of our clients’ assets is our number one priority."
The company is a voracious acquirer, and now has $70 billion in client assets. It said in August that $7.6 billion had come through the door just this year. The firm is suing Darrah for disgorgement of ill-gotten gains "well in excess of $1 million" and for complete or partial cancellation of the asset purchase agreement. The firm also wants her to stop contacting her customers.