Founder of Investment Advisory Firm Charged with Wire Fraud, Investment Adviser Fraud and Money Laundering
An indictment was unsealed today in federal court in Central Islip charging Jeffrey Slothower, a former registered investment adviser and founder of the New York investment advisory firm Battery Private, Inc. (“Battery Private”), with wire fraud, investment adviser fraud, and money laundering in connection with a scheme to misappropriate more than $1 million from current and prospective clients. Slothower was arrested earlier today in Southampton, New York, and will make his initial appearance via videoconference this afternoon before United States Magistrate Judge Steven L. Tiscione.
Breon Peace, United States Attorney for the Eastern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the arrest and charges.
“As alleged, Slothower executed a calculated scheme in which he repeatedly lied to his current and prospective clients about putting their money into legitimate investments, when in reality he stole their money to fund his lavish lifestyle,” stated United States Attorney Peace. “This Office will vigorously investigate and prosecute corrupt financial advisers like the defendant who abuse their clients’ trust and violate the law to enrich themselves.” Mr. Peace thanked the Securities and Exchange Commission, New York Regional Office, for their assistance during the investigation.
“Slothower joins the long-running list of those who exploit their position as investment advisors to siphon funds from their investors directly into their own pockets. This type of behavior is not only damaging to investors, but to the overall economy as well. The FBI continues with our dedicated efforts to investigate those who commit this type of fraud wherever and whenever we can,” stated FBI Assistant Director-in-Charge Driscoll.
As set forth in the indictment, Slothower was the founder and operator of Battery Private, a New York investment advisory firm. While operating Battery Private, Slothower solicited business from Victim-1 and Victim-2, a couple from California whose money Slothower had managed at another financial services firm. Slothower promised the victims he could beat any rate of return they were receiving and do so without market risk. Victim-2 thereafter signed an investment advisory contract with Battery Private. Slothower continued soliciting Victim-1’s business, and, in 2017, he offered to invest Victim-1’s money into what Slothower described as bonds backed by homeowner’s association fees (the “HOA Bonds”), which would pay Victim-1 an eight percent return. Based on these representations, Victim-1 agreed to invest money with Slothower through Battery Private.
Slothower sent Victim-1 wiring instructions for his investment and attached a document that made additional representations about Victim-1’s purported investment, claiming that Victim-1’s money would be held in the “capital reserves” of Battery Private. Thereafter, between January 25, 2017 and January 27, 2017, Victim-1 sent more than $500,000 to Slothower at Battery Private to be invested in the purported HOA Bonds. However, that money was not invested in HOA Bonds or held in “capital reserves” as represented by Slothower; instead, Slothower used that money to, among other things, wire money to himself, purchase a luxury automobile and pay fees for a private golf club on Long Island. To further the fraudulent scheme, Slothower thereafter made payments to Victim-1 that were falsely represented as quarterly distributions from Victim-1’s investment.
Later, Slothower sought out additional funds and asked Victim-1 to find money to invest including money from Victim-2 who was then a Battery Private client. Victim-2 learned about the HOA Bond investment from Victim-1, including the fact that Victim-1 had been receiving purported quarterly returns from the investment. Thereafter, Victim-2 agreed to invest in the same purported HOA Bonds, and in or about December 2017, Victim-2 sent more than $500,000 to Slothower at Battery Private that was for investment in the HOA Bonds. However, like Victim-1, Victim-2’s money was not invested in HOA Bonds or held in “capital reserves” as represented by Slothower. Instead, Slothower used that money to, among other things, pay personal credit card bills. To further the fraudulent scheme, Slothower made payments to Victim-2 that were falsely represented as quarterly distributions from Victim-2’s investment
In June 2018, Victim-1 made an additional investment of approximately $84,000 into the purported HOA Bonds. Again, Slothower did not invest that money in HOA Bonds or hold it as “capital reserves,” as he previously represented. Instead, Slothower used Victim-1’s money to, among other things, make purported quarterly payments to Victim-1 and Victim-2 that were falsely represented as their investment returns and to pay the private golf club on Long Island.
The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Slothower faces up to 20 years in prison.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Drew G. Rolle and Michael Bushwack are in charge of the prosecution.
Southampton, New York
E.D.N.Y. Docket No. 21-CR-602 (GRB)