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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of New York

Wednesday, February 5, 2020

Financial Adviser Sentenced To 30 Months In Prison For Defrauding Clients In Fake Investment Scheme

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that ELIAS HERBERT HAFEN, a former financial adviser at two investment banks with offices in New York, New York, was sentenced yesterday to 30 months in prison for having defrauded his clients out of more than $1.6 million.  HAFEN previously pled guilty to one count of investment adviser fraud before United States District Judge Alvin K. Hellerstein, who imposed yesterday’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Elias Hafen promised to invest his clients’ money in a high-yield fund with guaranteed returns, and propped up his fraud with fake account statements.  He never invested his clients’ money, instead using it to line his pockets.”

According to allegations in the Information, other documents filed in federal court, and statements made in public court proceedings, including during HAFEN’s guilty plea:

From 2011 until 2018, HAFEN engaged in a scheme to defraud 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 approximately $1.6 million 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 personal expenses. 

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In addition to the prison term, HAFEN, 64, was also sentenced to three years of supervised release, ordered to pay $745,000 in restitution, and ordered to forfeit $806,750.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation 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.

Securities, Commodities, & Investment Fraud
Jim Margolin, Nicholas Biase (212) 637-2600
Press Release Number: 
Updated February 5, 2020