Baltimore Financial Advisor Indicted for Allegedly Defrauding Vulnerable Clients of over $838,000

Allegedly Stole Over $756,000 from the Trust Held for A Child With Birth Injuries and
$42,000 from an 85 Year Old Dementia Sufferer

August 16, 2011

Baltimore, Maryland - A federal grand jury has indicted Ralph Edward Thomas, Jr., age 52, of Baltimore, Maryland, today for mail fraud in connection with a scheme to defraud his clients of more than $838,350. Thomas was a financial adviser and had an active insurance license with the State of Maryland which enabled him to sell life insurance, health insurance and variable annuities.

The indictment was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; and Chief James W. Johnson of the Baltimore County Police Department.

According to the indictment, from August 2000 through February 2004, Thomas was Vice President of Harbor Financial, a subsidiary of Harbor Bank which offered brokerage, insurance products and financial planning and from February 2004 through July 2010, Thomas was employed as a financial advisor by Wells Fargo Advisors, LLC.

The indictment alleges that in December 2001, Thomas met KL, the trustee of a $3 million settlement received on behalf of her daughter, who suffered birth injuries, and persuaded KL to move the trust account to Harbor Bank. Each month, the annuity paid funds directly into the Harbor Bank trust account.

The indictment alleges that Thomas stole approximately $756,963.98 from the trust account for KL’s daughter by withdrawing money from the Harbor Bank trust account and purchasing cashier’s checks which he deposited into his personal bank accounts. Thomas allegedly used the funds to pay his personal credit card accounts and other personal expenses. The indictment alleges that on July 29, 2009, Thomas used $100,000 stolen from the Harbor Bank trust account to purchase a home in Reisterstown, Maryland.

The indictment further alleges that between June 2006 and May 2009, Thomas initiated three mortgages in the name of KL on her personal residence, without her permission, forging her name on mortgage documents and other paper work. The proceeds of the mortgages were deposited into the Harbor Bank account and were allegedly withdrawn by Thomas who diverted the funds to his personal use. KL incurred $26,886.36 in losses and expenses as a result of these three mortgages.

In addition, according to the indictment, in January 2006, Thomas became the financial advisor for LM, a retired Baltimore resident who oversaw the disbursements from an annuity that was shared by LM and her sister, an 85 year old who suffered from dementia. LM allowed Thomas to manage the money in the annuity. The indictment alleges that Thomas withdrew $75,000 from LM’s account and used $42,000 of those funds for his personal benefit, including purchasing cashier’s checks made payable to credit card companies where Thomas held accounts.

The indictment seeks the forfeiture of the proceeds of Thomas’ scheme in the amount of $838,350.04, including investment accounts owned by Thomas, the home in Reisterstown, and luxury automobiles.

Thomas faces a maximum sentence of 20 years in prison and a $250,000 fine for mail fraud. No court appearance has been scheduled yet.

An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.

United States Attorney Rod J. Rosenstein praised the FBI and Baltimore County Police Department for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney Gregory R. Bockin, who is prosecuting the case.

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