Investment Advisor Sentenced For Near $2 Million Fraud
PHILADELPHIA - Michael Donnelly, 47, of Lecanto, Florida, was sentenced today to 99 months in prison for an investment scheme that bilked his friends and clients of nearly $2 million. Donnelly pleaded guilty on December 21, 2015, to one count of wire fraud and with one count of securities fraud. In addition to the prison term, U.S. District Court Judge Edward G. Smith ordered restitution in the amount of $1,990,150.24, three years of supervised release, and a $200 special assessment.
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. 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. But instead of investing his clients’ money, Donnelly appropriated the investment funds for his own use.
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 persuaded another investor to partially liquidate an annuity under the guise that there was an opportunity to buy out another investor. His plan was to use those funds to pay the investing couple rather than buying out an investment held by another client.
The case was investigated by the FBI with assistance from the Securities and Exchange Commission Division of Enforcement. It was prosecuted by Assistant U.S. Attorney Linwood C. Wright, Jr.