Kenmore Financial Advisor Sentenced to 5 Years in Prison for Mail Fraud and Social Security Number Fraud
Some Fraud Dating Back Nearly 30 Years
A long-time Kenmore, Washington financial advisor was sentenced today in U.S. District Court in Seattle to five years in prison for mail fraud and Social Security Number fraud, announced U.S. Attorney Jenny A. Durkan. EDWARD H. KAHLER, 65, was the owner of Key Resources, a Kenmore, Washington retirement consulting company which sold annuities and life insurance. KAHLER used proprietary information from the company he previously represented to access customer accounts. KAHLER used that information to liquidate the customer accounts and used the money for his own benefit. KAHLER was ordered to pay more than $1 million to eight elderly victims. At sentencing U.S. District Judge Robert S. Lasnik called KAHLER a “sophisticated fraudster” and noted “he took away trust, he took away money… and now people’s lives are affected in a terrible way.”
According to records filed in the case, from 1983 to 2007 KAHLER was a financial advisor for Variable Annuity Life Insurance Company (VALIC), and was appointed by VALIC to sell its annuities. VALIC terminated KAHLER in 2007 when it discovered he was promoting competing annuities. Using information that he had in his files, KAHLER created profiles for former clients using the VALIC on-line system, and fraudulently caused VALIC to liquidate the clients’ accounts and send the proceeds to him for his personal use and benefit. In the instance described in the complaint, on Christmas Eve 2012, KAHLER liquidated the account of a client who had died in 1984, and used the $125,000 to fund a trip to Las Vegas, the payment on a BMW and other personal expenses. He also paid business expenses with the money.
In fact, one type of KAHLER’s fraud endured nearly 30 years. In 1986 one victim thought she had purchased an annuity for more than $103,000. In fact KAHLER kept the money and never purchased the annuity. Over the years KAHLER sent false statements to the purchaser indicating the value of the account. In 2008, KAHLER sent a statement stating the account was worth more than $390,000. However, in 2012 when the victim tried to access her funds, she learned no annuity had ever been purchased on her behalf. Five other victims also sent checks to KAHLER for him to purchase annuities for them. KAHLER kept the money and never invested the money as requested.
The case was investigated by the FBI, the U.S. Postal Inspection Service (USPIS), and the Social Security Administration Office of Inspector General (SSA-OIG). The case is being prosecuted by Assistant United States Attorney Justin Arnold.