United States Attorney Jenny A. Durkan
Western District of Washington
Former Gravelly Lake Stockbroker Pleads Guilty To Wire Fraud And Filing A False Tax Return
Defendant Admits Stealing from Elderly Client and Heirs
A former Gravelly Lake, Washington stockbroker who now lives in Aspen, Colorado, pleaded guilty today in U.S. District Court in Tacoma to wire fraud and filing a false tax return. MICHAEL D. MONTGOMERY, 43, was a licensed stockbroker and investment advisor in the Tacoma, Washington area until 2009, when the Washington State Department of Financial Institutions revoked his registration as a securities dealer for unethical conduct. MONTGOMERY admitted today in his plea agreement that he stole money from an elderly client. Prosecutors contend the amount of loss is more than $1 million. MONTGOMERY claims that loss figure is too high. Judge Robert J. Bryan will determine the loss amount and the amount of restitution at sentencing on September 21, 2012.
According to the plea agreement filed in the case, MONTGOMERY was first an investment advisor for an elderly man residing in the Tacoma area, and later became the trustee of the man’s revocable living trust. MONTGOMERY also had power of attorney for the victim. Over the years 2003 through 2007, MONTGOMERY misappropriated, by deceit and fraud, a substantial amount of money from the elderly man’s bank and investment accounts. From 2005 through 2007, MONTGOMERY caused $654,600 to be sent by wire from his client’s Charles Schwab account to his client’s Key Bank account. Then MONTGOMERY took the money and used it for his own benefit. From January 2004 and July 16, 2006, MONTGOMERY wrote $598,916 in checks to himself from his client’s accounts, purportedly for services to his client. Following the client’s death on July 18, 2006, MONTGOMERY wrote an additional $243,745 in checks to himself from the client’s estate, purportedly for “estate services.” However, MONTGOMERY never provided the victim’s family with any accounting of what these services entailed. MONTGOMERY also failed to report any of the income on his federal income tax returns.
“As a law enforcement official for over twenty years, nothing motivates me more than protecting the innocent and most vulnerable in our communities,” said Kenneth J. Hines, the IRS Special Agent in Charge of the Pacific Northwest. “Fraudsters who prey on vulnerable victims, in this case the elderly, for personal financial gain will be held accountable by our legal system.”
The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI) and the Washington State Department of Financial Institutions. The case is being prosecuted by Assistant United States Attorneys David Reese Jennings and Justin Arnold.