Former Investment Advisor Sentenced To 72 Months In Prison For $5 Million Securities Fraud Scheme
Acting United States Attorney Gregory G. Brooker announced the sentencing of BRADLEY THOMAS SMEGAL, 63, to 72 months in prison for stealing more than $5.1 million from several of his investment advisory clients. SMEGAL, who pleaded guilty on August 11, 2016, to two counts of securities fraud, was sentenced today before U.S. District Judge David S. Doty in Minneapolis, Minn.
“The defendant stole from clients who trusted his professional investment advice,” said Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Field Office. “The sentence handed down today sends a clear message that those who abuse their positions of trust for personal gain will be brought to justice and held accountable for their crimes.”
According to his guilty plea 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 his guilty plea and documents filed in court, between August 2007 and January 2013, SMEGAL convinced several investment advisory clients to invest in entities in which SMEGAL had an undisclosed ownership or management role, or otherwise controlled the bank accounts. SMEGAL told investors that these entities were involved in international infrastructure and mining projects, among other things. SMEGAL, without disclosing his personal stake, often described the investments as conservative and guaranteed specific rates of return to the clients.
According to his guilty plea 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 his guilty plea 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.
BRADLEY THOMAS SMEGAL, 63
Securities fraud, 2 counts
72 months in prison
Two years of supervised release
$4,978,195.35 in restitution
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United States Attorney’s Office, District of Minnesota: (612) 664-5600