A Wisconsin-based advisor pushed high-risk investments on purchasers, however pocketed the funds purchasers gave him, in keeping with twin fees filed by each the Securities and Trade Fee and the Division of Justice.
Anthony Liddle pleaded responsible in Wisconsin federal courtroom this week to fees of wire fraud, which carries a most penalty of 20 years in jail, in keeping with the plea settlement. In accordance with the SEC and DOJ, Liddle bilked about $1.9 million out of 13 purchasers, a lot of whom have been retirees.
Liddle, the pinnacle of Wausau, Wis.-based Prosper Wealth Administration, was accused of touting “L” Bonds from GWG Holdings as lower-risk alternate options, whereas the prospectus warned they have been excessive threat and that somebody may lose their total funding.
According to SEC charges, Liddle’s misconduct stretched from June 2019 via Might of final yr.
He was affiliated with Western Worldwide Securities till April 2020, in keeping with his BrokerCheck profile. That agency is the topic of the SEC’s first action related to violations of Regulation Best Interest. Nonetheless, Liddle was not accused of violating the rule, because the agency and several other of its advisors have been final yr. (WIS is a hybrid dealer/seller owned by Atria Wealth Options).
Within the Reg BI-related motion, the SEC argued that WIS and several other of its reps violated the care and disclosure obligations within the rule by recommending the L Bonds, which funded purchases of life insurance coverage insurance policies. In 2022, GWG Holdings suspended the sale of the proprietary bonds, however between July 2020 and April 2021, WIS reps bought greater than $13 million of the securities to retail clients, a few of whom have been retirees with reasonable threat tolerances, in keeping with the fee.
Liddle first based Prosper Wealth in 2016, providing securities and advisory providers via WIS, which isn’t named within the SEC grievance, and labored with greater than 150 purchasers. In conversing with purchasers, he would misrepresent the chance of the GWG L Bonds, convincing a few of them to promote current holdings.
Then, he would direct them to ship the brand new funds to his agency, telling them he’d purchase lower-risk securities. Not solely was Liddle misrepresenting the investments, however he was additionally not buying them after getting the cash, in keeping with the SEC. As an alternative, he falsified account statements and paid for curiosity funds straight out of purchasers’ funds.
In some instances, he instructed purchasers he’d bought GWG bonds even in periods through which gross sales of the bonds have been suspended. In a single occasion, Liddle satisfied one aged shopper that the L Bonds have been out there, so she stuffed out an software to purchase the bonds and despatched a test to fund the funding in Might 2021, although they might not be bought.
In April 2022, he satisfied one other shopper to exit their annuity and put money into the bonds; the shopper did so, paying a penalty of practically 20% of the annuity’s whole worth, in keeping with the fee.
The SEC declined to remark past the general public filings.
Whereas the costs towards WIS and Liddle have been interrelated by the GWG bonds, the accusations towards Liddle appeared “quite a bit worse,” stated Max Schatzow, an lawyer and co-founder of RIA Attorneys.
“This wasn’t simply him recommending some high-risk safety,” he stated. “This was taking the cash, pocketing it, and never shopping for the safety he was telling some purchasers he was shopping for.”
Final yr, FINRA barred Liddle from associating with any FINRA member, and Wisconsin’s division of securities additionally completely barred him from the business in August. Along with a possible jail sentence, he faces disgorgement and a civil penalty, in addition to an business bar from the SEC.
