Financial Advisor Pleads Guilty to Fraud
The Commission’s focus on retail investors has translated into brining increasing numbers of actions against investment advisers. A number of those actions center on fraudulent schemes which were little more than simple theft. Those, and other similar actions typically result in the filing of parallel criminal charges by the U.S. Attorney’s Office. One of those actions is U.S. v. Hafen, (S.D.N.Y. Plea Sept. 4 2019).
Ellis H. Hafen was a financial adviser at two investment banks with offices in Manhattan. Over a period of about five years, beginning in 2013, he convinced a group of clients from those banks to entrust him personally with their funds because of his access to an investment fundthat had guaranteed returns. Specifically, Mr. Hafen convinced 11 of his bank clients that he had access to an investment fund that had high yields and guaranteed returns. This fund was outside of the banks which employed Mr. Hafen. Accordingly, the investors gave Mr. Hafen their investment funds which he placed in his personal accounts.
Periodically, the investors were furnished account statements from the outside fund. Those statements reflected the investments and the guaranteed returns. Unfortunately, all of Mr. Hafen’s claims were false. This week Mr. Hafen pleaded guilty to one count of investment adviser fraud. Sentencing is set for January 14, 2020.