Former Investment Advisor Charged with Securities Fraud for Stealing more than $5 Million

United States Attorney Andrew M. Luger announced an information charging BRADLEY SMEGAL, 63, for stealing more than $5.1 million from at least 14 of his investment advisory clients. SMEGAL is charged with two counts of securities fraud.[1]

According to the information and documents filed in court, SMEGAL was a registered broker and investment advisor from 1980 until May 2012 when the Financial Industry Regulatory Authority (FINRA) barred him from the securities industry.

According to the information and documents filed in court, between August 2007 and January 2013, SMEGAL convinced at least 14 investment advisory clients to invest in entities in which SMEGAL had an undisclosed ownership interest or otherwise controlled the investment vehicle. SMEGAL often described the investments as conservative and guaranteed specific rates of return to the clients. SMEGAL did not disclose his personal stake in these investments to his clients.

According to the information and documents filed in court, SMEGAL fraudulently convinced his clients to invest approximately $5.14 million into these entities. He diverted $825,900 of those funds to his personal bank account. As part of an effort to hide this theft, SMEGAL often routed the money through multiple bank accounts before depositing it into his personal account. In order to keep the scheme going, SMEGAL sometimes made Ponzi-type payments to investors.

According to the information and documents filed in court, just prior to being barred by FINRA, in November 2011, Wells Fargo, where SMEGAL had been working, terminated his employment. SMEGAL had not disclosed to his employer that he had a financial interest in all of the entities to which he steered his investment advisory clients. After he was terminated, SMEGAL led certain clients to believe that he was still employed by Wells Fargo.

This case is the result of an investigation conducted by the FBI and the United States Postal Inspection Service.

This case is being prosecuted by Assistant U.S. Attorney David M. Maria.

Defendant Information:

BRADLEY SMEGAL, 63

Bainbridge Island, Wash.

Charges:

• Securities fraud, 2 counts