Financial Adviser Pleads Guilty To Defrauding Clients In Fake Investment Scheme

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced today that ELIAS HERBERT HAFEN, a former financial adviser at two investment banks with offices in Manhattan, pled guilty today to investment adviser fraud in connection with having defrauded his clients out of hundreds of thousands of dollars.  HAFEN surrendered to law enforcement and was presented before Magistrate Judge Debra Freeman in Manhattan federal court this afternoon, and he pled guilty before District Judge Alvin K. Hellerstein this afternoon.

U.S. Attorney Geoffrey S. Berman said:  “Elias Hafen promised his investment clients significant returns in a ‘special’ fund.  With fake statements and guaranteed returns, Hafen was every investor’s worst nightmare.  He never invested his clients’ money and instead used it to fund his own lavish lifestyle.  Today, Hafen admitted his crimes and he will soon likely spend time in prison for his misdeeds.”

According to allegations in the Information and other documents filed in federal court, as well as statements made in public court proceedings:

From 2013 until 2018, HAFEN engaged in a scheme to defraud at least 11 of his financial advisory clients into believing that HAFEN had access to a high-yield investment fund with guaranteed returns, which was not affiliated with the investment bank at which HAFEN worked.  On HAFEN’s advice, these clients transferred hundreds of thousands of dollars directly to HAFEN’s personal bank account for investment in the purported investment fund over the years that HAFEN engaged in his fraudulent scheme.  HAFEN also created fictitious “Investor’s Statements” bearing the name of a non-existent investment company purporting to detail the status of his victims’ investments.  In reality, however, there was no investment fund at all; HAFEN was using the victims’ funds to pay for a lavish lifestyle including custom men’s accessories and an expensive collection of artwork.

*          *          *

HAFEN, 64, of New Canaan, Connecticut, pled guilty to one count of investment adviser fraud, which carries a maximum penalty of five years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

HAFEN is scheduled to be sentenced by Judge Hellerstein on January 14, 2020.

Mr. Berman praised the investigative work of the FBI and thanked the Securities and Exchange Commission, which has filed civil charges in a separate action.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Jacob R. Fiddelman is in charge of the prosecution.