Investment Advisor Charged With Bilking Clients Out Of Nearly $2 Million
PHILADELPHIA - Michael Donnelly, 47, of Lecanto, Florida was charged today by information in an investment scheme that bilked his friends and clients of nearly $2 million, announced United States Attorney Zane David Memeger. Donnelly is charged with one count of wire fraud and with one count of securities fraud.
Donnelly was an investment advisor and registered representative who served as president of Donnelly, Steen & Company, doing business as Coastal Investment Advisors, Inc., Coastal Equities, Inc., and Donnelly Advisors Group, which he also owned. According to the information, between November 2007 and August of 2014, Donnelly persuaded about a dozen investors, many of whom were senior citizens, to allow him to invest their money in securities or certificates of deposit. It is alleged that instead of investing his clients’ money, Donnelly appropriated the investment funds for his own use.
The information further alleges that Donnelly provided at least one client with brokerage account statements belonging to another client who held dozens of large cap stocks in an effort to conceal that he had appropriated the monies for his own use. When an investing couple asked Donnelly for their funds, he allegedly persuaded another investor to partially liquidate an annuity under the guise that there was an opportunity to buy out another investor. He then allegedly intended to use those funds to pay the investing couple rather than buying out an investment held by another client.
In a parallel action, the Securities and Exchange Commission today announced a civil settlement with Donnelly relating to the same conduct.
If convicted the defendant faces a maximum possible sentence of 40 years in prison, not more than three years of supervised release, a $5.25 million fine and a $200 special assessment.
The case was investigated by the FBI with assistance from the Securities and Exchange Commission Division of Enforcement. It is being prosecuted by Assistant U.S. Attorney Linwood C. Wright, Jr.
An Information is an accusation. A defendant is presumed innocent unless and until proven guilty.