Former Bellingham Financial Adviser Sentenced To Prison For Wire Fraud Involving Theft From Elderly Clients
'Broker’ had been Barred from Financial Advising but Failed to Tell Clients
A long-time tax and financial adviser in Bellingham, Washington was sentenced today to 51 months in prison, three years of supervised release and $251,892 in restitution for wire fraud, announced Acting U.S. Attorney Annette L. Hayes. JEFFREY M. KNUTSEN, 43, owned and operated Bellwether Financial Services dba Bellwether Wealth Management. In July 2005, KNUTSEN was barred by the Financial Industry Regulatory Authority (“FINRA”) from associating with any broker-dealer as a stock broker because of a customer complaint that KNUTSEN had embezzled from the client’s account. FINRA is an industry organization which regulates financial brokers and brokerage firms. Despite being barred, KNUTSEN continued to work with clients – many of them elderly – and now has been convicted of stealing more than $255,000 from 26 client accounts. At sentencing U.S. District Judge James L. Robart noted that KNUTSEN had continued a career of misappropriating money saying, “This is a crime of greed -- pure unadulterated greed – plain and simple.”
“This fraud damaged the elderly victims emotionally as well as financially,” said Acting U.S. Attorney Annette L. Hayes. “They trusted Jeffrey Knutsen to honestly invest their savings so they could enjoy a secure retirement. Now they are betrayed and wary as they try to safeguard any savings they have left.”
According to records filed in the case, after being barred by FINRA, KNUTSEN did not tell his clients that he had been barred, but instead told them he was moving to a different online brokerage to reduce the fees they would have to pay. He set up online accounts with TD Ameritrade and later E*Trade in his clients’ names and retained full access and control over the accounts, including check-writing privileges. He told the clients he would charge them a management fee of one percent or less per year to manage their accounts. However over seven and a half years he caused the online broker/dealers to issue more than 200 checks for more than $250,000 without the authorization or knowledge of his clients. KNUTSEN then deposited the checks in his account and used the money for his personal gain. Many of the victims were elderly and had little understanding of online brokerage accounts.
The Financial Industry Regulatory Authority (“FINRA”) has online resources to allow clients to check on their financial advisor’s disciplinary history here. The BrokerCheck website
is a free tool that FINRA has set up to help investors research the professional backgrounds of current and former FINRA-registered brokerage firms and brokers, as well as investment adviser firms and representatives.
The case was investigated by the FBI and Bellingham Police Department. The case was prosecuted by Assistant United States Attorneys Steven Masada and Justin Arnold.