Financial Advisor Fraud in Illinois

a business man with a computer, securities fraudAnybody in Illinois can fall victim to financial advisor fraud regardless of who they are. Because financial advisors are often trusted by their clients, they may take advantage of that trust in order to embezzle funds from them. It is important for Illinois residents to be aware of the types of fraud that financial advisors sometimes commit so that they are able to identify it when it is occurring and get help. This type of fraud is committed by advisors against all kinds of people, including celebrities as the recent case involving Mike Tyson’s former financial advisor demonstrates. A securities fraud attorney may help his or her clients with recovering damages so that they can be compensated when they have been the victims of financial advisor fraud.

 

Advisor Gains Trust; Embezzles Money

Brian Ourand recently entered a guilty plea to embezzling more than $1 million from his clients, including Mike Tyson, Glen Rice, Dikembe Mutumbo and a fourth athlete while working as an executive at SFX Financial Advisory Management. Tyson and Rice each said that Ourand ingratiated himself to them to the point that Tyson invited him to his wedding and Rice considered Ourand to be one of his very closest friends. During this time, he was stealing money from both men as well as from Mutumbo and the fourth unidentified athlete.

Ourand stole money from the athletes’ accounts that he was in charge of handling, writing himself checks and conducting wire transfers to benefit himself. Ourand reportedly embezzled the money beginning in 2006 until he was fired from SFX in Aug. 2011, and he spent the money that he stole on such things as vacations, dental work, private school tuition for a girlfriend’s relative, clothing and other personal expenditures. He was caught in 2011 when Mutumbo called SFX to complain because his credit card was declined, and he had learned that the payments had not been made on it. A subsequent investigation by SFX and the Securities and Exchange Commission uncovered the extent of the fraud that Ourand had perpetrated.

Identifying Problem Advisors

Investors should avoid doing business with certain financial advisors in order to protect their assets. Some signs of trouble include the following:

  • Advisors who are not registered with FINRA if they are stockbrokers, with the SEC if they are fee-only advisors managing more than $100 million in assets or with state securities regulators if they are fee-only advisors managing less than $100 million in assets
  • Advisors who do not use third-party clearinghouses or custodian companies to send reports about the investments that they manage to their clients
  • Financial advisors who lack certification and credentials as certified financial planners, chartered financial consultants or chartered financial analysts
  • Advisors who churn accounts in order to drive up their commissions
  • Advisors who tend to favor insurance products
  • Advisors who try to push their clients into forming general partnerships with them

Investors may help to prevent themselves from becoming the victims of financial advisor fraud by avoiding advisors who demonstrate these issues. A securities fraud attorney also recommends that investors take other steps to protect themselves even if their advisors have the credentials that they should use third-party clearinghouses and who are registered.

Spotting Fraud Early

One mistake that many investors make is placing too much trust in their financial advisors. It is a common tactic for advisors who commit fraud to befriend the clients from whom they are stealing. By gaining trust, they are less likely to be suspected and may be able to get away with their fraudulent actions for longer periods of time. A securities fraud attorney recommends that investors trust the advice of their advisors but that they do not fail to check their statements and to conduct due diligence on the work that their advisors are doing for them.

Investors should make sure to review their account statements regularly. In Ourand’s case, the athletes relied on him to pay their bills and to manage their investments. The fact that he was able to get away with his ongoing thefts for five years demonstrates the importance of routinely checking account statements rather than just relying on the word of financial advisors. If an investor believes that his or her financial advisor has misappropriated or otherwise mismanaged funds, it is important for the investor to report the activity to the company for whom the advisor works and to file a claim with the appropriate regulatory body. A securities fraud attorney may help his or her clients to recover damages so that they might recoup the money that was lost because of the financial advisor’s fraud.

It is unfortunate that some financial advisors commit fraud with their clients’ money. By being aware of the risks and checking everything carefully, investors may avoid these types of problems. If fraud has occurred, they might want to file lawsuits to recover money.