Los Angeles Investment Adviser Pleads Guilty To Investment Adviser Fraud For Stealing More Than $1.5 Million From Clients
Defendant Fraudulently Profited by Charging Excess Management Fees
BROOKLYN, NY – Earlier today, Marc Broidy, the founder, Principal and Chief Executive Officer of Broidy Wealth Advisors, LLC, pleaded guilty to investment adviser fraud for defrauding his clients by withdrawing $640,000 in excess management fees, and misappropriating more than $865,000 worth of stock held in trusts, over which he was trustee. The guilty plea was entered before United States District Judge Eric N. Vitaliano at the federal courthouse in Brooklyn, New York. As part of his plea agreement with the government, Broidy has agreed to make restitution to the victims of his fraud. When he is sentenced, Broidy faces up to five years in prison, as well as restitution, criminal forfeiture and a fine.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office. Mr. Capers thanked the Securities and Exchange Commission for their cooperation and assistance in the investigation.
According to court filings and facts presented at the plea hearing, from approximately November 2010 to July 2016, Broidy had discretionary authority to buy and sell securities in brokerage accounts he set up for his clients and was permitted to deduct management fees from those accounts as compensation. For three of his clients, instead of deducting the amounts he was permitted to bill, Broidy took more than $640,000 in excess fees. To hide his theft, Broidy falsified many of those clients’ Internal Revenue Service Form 1099s so that the forms reflected far less in management fees than Broidy actually took.
One client discovered the theft and forced Broidy to repay the stolen fees in a settlement. To pay the settlement and other personal expenses, such as credit card bills and house and car payments, Broidy sold more than $865,000 worth of stock held in trust accounts that another client had established for his children, and for which he had appointed Broidy trustee. Broidy also encouraged several clients to invest in startup companies that had agreed to pay Broidy a percentage of any money Broidy raised for the companies, but did not disclose his arrangement to his clients.
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The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorney Matthew Amatruda is in charge of the prosecution.
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Los Angeles, California
E.D.N.Y. Docket No. 17-CR-064 (ENV)