Potomac Investment Adviser Sentenced to over 5 Years in Prison for Wire Fraud and Money Laundering in a Scheme to Defraud Investors
Scheme Resulted in Loss of More than $1.5 Million
Greenbelt, Maryland - U.S. District Judge Roger W. Titus sentenced Marc Freedman, age 49, of North Potomac, Maryland, today to 63 months in prison followed by three years of supervised release for wire fraud and money laundering related to a scheme to defraud investors and use the money for his personal benefit, announced United States Attorney for the District of Maryland Rod J. Rosenstein.
According to the plea agreement, between 2002 and 2004, Freedman defrauded clients of Tri Capital Advisors, an investment firm and registered investment advisor, where Freedman had been employed since 1993. For example, between September 17 and September 27, 2002, Freedman caused approximately $65,000 in advisor fees to be improperly deducted from a trust account (Trust Account) he controlled on behalf of a client. Between March 2002 and June 2003, Freedman debited more than $300,000 from the account, purportedly to make 19 transactions for stock purchases that were not in fact made. On June 14, 2004, Freedman wrote a $5,000 check, drawn on the trust account, and made payable to the Washington Asset Group, a company owned by Freedman.
In addition, on August 2, 2002, another client of Tri Capital Advisors established a living trust account (Living Trust Account). In March 2004, Freedman falsely told the client that the money was in “securitized notes.” In fact, the $1.2 million had been wired from the Tri Capital Advisors Living Trust Account to an account in the name of the Washington Asset Group. Freedman used the money to: write a check for $1,048,545 to pay off a third account holder with Tri Capital Advisors whose account Freedman had largely dissipated; reimburse the Trust Account $45,000 for monies used by Freedman for his personal benefit; and write a check for $13,500 to purchase a 2004 Nissan Xterra.
In a separate civil action brought by the Securities and Exchange Commission, Freedman has agreed to be permanently barred from the investment advisory business.
United States Attorney Rod J. Rosenstein praised the Federal Bureau of Investigation and for its investigative work and thanked the Securities and Exchange Commission for its cooperation. Mr. Rosenstein also thanked Assistant U.S. Attorney David I. Salem, who prosecuted the case.