Financial Advisor Pleads Guilty To Fraud And False Statement Charges
Damian Williams, the United States Attorney for the Southern District of New York, announced that ADAM BELARDINO, the chief executive officer of the Maddox Group, pled guilty to two counts of wire fraud and one count of making a false statement to the Internal Revenue Service in connection with separate schemes to defraud clients and to fail to pay contributions made by Maddox Group employees to the Maddox Group 401(k) plan. BELARDINO pled guilty before the Honorable Judith C. McCarthy in White Plains federal court today.
According to the allegations in the Superseding Information to which BELARDINO pled guilty and other court documents:
Embezzlement from Victim 1
BELARDINO had managed Victim 1’s investments at another firm before he founded Maddox in July 2019. In August 2019, BELARDINO convinced Victim 1 to liquidate some of her portfolio and to transfer the liquidated funds to Maddox for investment. Victim 1 then transferred more than $313,000 to Maddox in eight separate transactions between August 2019 and October 2020. Instead of investing Victim 1’s money as he had promised, BELARDINO used her money to pay the operating expenses of Maddox, including payroll and office rent; to pay down prior debt; to pay credit card charges, which consisted primarily of personal items; and to pay for personal travel.
In September 2021, Victim 1 directed BELARDINO to transfer her portfolio at Maddox to her brokerage account at another firm. From September 2021 to February 2022, BERNARDINO indicated to the victim and her family members that he was liquidating the portfolio and would return the funds shortly. He additionally provided documents suggesting that he had made a wire transfer of Victim 1’s funds to her bank and deposited checks drawn on a checking account held by Maddox into Victim 1’s bank account for what he claimed was the full value of her portfolio. Nevertheless, Victim 1 never received any funds by wire, and the checks BELARDINO had deposited were returned due to insufficient funds in Maddox’s account.
Scheme to Obtain Fraudulent Life Insurance Commissions - Victim 2
In or about May 2019, BELARDINO served as the agent for Insurance Company 1 in connection with an application by Victim 2 for a life insurance policy with a face amount of $1 million, which amount was eventually increased to $18 million. As an agent, BELARDINO received commissions from Insurance Company 1 once Victim 2’s application was approved.
In or about April 2020 and January 2021, respectively, BELARDINO applied for two additional life insurance policies with a face amount of $3 million and $5 million on behalf of Victim 2 without Victim 2’s knowledge or authorization. While applying for these policies, BELARDINO made materially false statements regarding Victim 2’s income, net worth, and health. In or about August 2020 and May 2021, respectively, BELARDINO increased the face amount of one insurance policy to $6 million and the other to $12.1 million, again without Victim 2’s knowledge or authorization. He additionally paid and attempted to pay the policy premiums of $194,280 and $105,000 with Victim 2’s funds, and ultimately received approximately $197,497 in commissions from the two Insurance Companies.
False Statement in Connection with Fraudulent Withholding of Employee 401(k) Contributions
BELARDINO adopted a retirement savings plan (the “Plan”) on behalf of the Maddox Group that became effective on January 1, 2020. He served as the trustee of the Plan.
From on or about November 1, 2020, through on or about August 13, 2021, BELARDINO withheld $8,004.67 from the paychecks of the four Maddox employees other than himself who chose to participate in the Plan. BELARDINO failed to deposit these withheld funds into the Plan’s trust account and instead converted those funds to his and Maddox’s use.
On or about October 14, 2021, BELARDINO authorized the Plan administrator to file with the Internal Revenue Service a Form 5500-SF for the 2020 calendar year in which he falsely answered in the negative when asked “During : Was there a failure to transmit to the plan any participant contributions...?”
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BELARDINO, 37, of New York, New York, pled guilty to two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison, and one count of making a false statement to the Internal Revenue Service, which carries a maximum sentence of five years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge. BELARDINO will be sentenced by the Honorable Kenneth M. Karas.
Mr. Williams praised the outstanding investigative work of Special Agents of the FBI and Criminal Investigators of the Employee Benefits Security Administration of the United States Department of Labor.
The prosecution of this case is being handled by the Office’s White Plains Division. Assistant United States Attorney James McMahon is in charge of the prosecution.