The Securities and Exchange Commission has filed charges in a U.S. District Court against a Wisconsin investment advisor it said defrauded some 100 clients, many of them elderly, over a six-year period.
The agency said Michael F. Shillin of Appleton, Wis., lied to clients and mispresented the nature of their insurance policies, as well as fabricating documents telling them they were involved in high-profile initial public offerings and pre-IPOs. The agency filed the charges in the U.S. District Court for the Western District of Wisconsin yesterday.
Shillin, 32, has worked in the securities industry since 2011, first at Edward Jones and later as an investment advisor at Raymond James until 2018, according to BrokerCheck. After that, he was affiliated with Alliance Global Partners until last year, when he was barred by Finra in December. His insurance license was later permanently suspende, according to the Wisconsin Office of the Commissioner of Insurance.
Shillin’s misconduct, the SEC said, included such activities as selling insurance policies with fabricated long-term care benefits. He also told investors they had built up nest eggs from non-existent stock positions, or that he had subscribed to coveted shares in high-profile stocks that were yet to go public, the agency claimed, and in one case falsely told a client he’d invested funds in an opportunity zone for its capital gains advantages. The SEC said he used client funds to invest in two small businesses without the client’s knowledge. And Shillin allegedly told clients that they were invested in products that were regularly kicking off interest and dividends. He even set up a web portal that clients could use to monitor “pretend” investments, the agency said.
The agency said Shillin received several hundreds of thousands of dollars from the clients he defrauded through commissions and advisory fees.
He allegedly told one client that a SpaceX investment had added $450,000 to his wealth. The investment did not exist, but the client retired earlier based on the information, the SEC said.
“From at least December 2014 through December 2020, Shillin lied to his clients with regularity about a litany of important matters,” the filing reads. “Over the course of that time, his lies and deception morphed, taking different forms to various clients about a variety of securities products.”
From late 2014 for the next years, Shillin told some clients to roll over life insurance policies into new ones, some of which were variable annuities. He sold positions in their securities to pay the premiums on these new policies, the SEC said, and also told some clients they could stop paying premiums, which wasn’t true.
“To conceal the lies he made to an elderly client—and to prevent the policy from lapsing—Shillin secretly sold securities from the client’s advisory account to pay a premium. Unfortunately, Shillin thereafter failed to make subsequent payments, and the policy ultimately lapsed, pursuant to its terms, just weeks before the client’s death. All the while, Shillin continued lying to her family, insisting the policy remained in effect,” says the SEC complaint.
From at least June 2015, the agency claims, Shillin told clients he was getting them into companies like SpaceX, Palantir Technologies and 23andMe that had not yet gone public. He told others he’d bought them stock in the IPOs of hot companies like FitBit, Pinterest and Zoom Video Communications. His false claim to have access to such opportunities drew high-net-worth clients, the SEC said.