Investment Adviser Sentenced to 17 Years
Phillip Kenner began his career as a Boston based financial advisor. He developed a list of clients which included professional hockey players from the National Hockey League. Today he might be continuing to build his investment advisory business by adding to his all-star client list. He is not.
Today Mr. Kenner is preparing to serve 17 years in federal prison. He is also forfeiting $17 million along with all of his right, title and interest in assets that include an oceanfront resort in Mexico, real property in Hawaii and a Falcon 10 jet airplane. U.S. v. Kenner, No. 13-CR-607 (E.D.N.Y. Sentencing Oct. 5, 2020).
Defendant Kenner was convicted on counts of conspiracy and securities fraud at a trial where 40 witnesses testified and over 1,000 exhibits were introduced. The exhibits included audio recordings made by several victim investors memorializing how the one-time investment adviser siphoned millions of investor dollars into a web of holding companies from which he diverted funds for his enterprises, real estate ventures and car racing ventures.
The convictions centered on two schemes. The first began in 2003. It centered on a Hawaii real estate investment scheme. Mr. Kenner convinced a number of investors to put up $100,000 each for land development for luxury estates. The investors also opened personal lines of credit collateralized by their personal stock, bonds and saving accounts worth at least $10 million. The investors were assured the lines would only be used for development. Those lines were to be replenished since Lehman Brothers Holding, Inc. agreed to loan the project up to $105 million in August 2006.
In fact, Mr. Kenner borrowed nearly all of the funds available on investor lines. The cash was diverted to his personal ventures.
Another scheme involved Eufora LLC, founded by a co-defendant. While the co-defendant testified that in May 2009 the venture was nearly worthless, Mr. Kenner convinced clients to invest. Subsequently, Mr. Kenner and the co-defendant wired about $1.5 million of investor capital to accounts he and others controlled. The money was used for their benefit.
Finally, by early 2009 the Hawaii investor credit lines received notices of default. Mr. Kenner has successfully concealed for years the fact that he had wiped out the investor funds. Despite the defaults Mr. Kenner and a co-defendant convinced the investors to invest in a Global Settlement Fund. More than $2.9 million dollars was put into the fund. Defendant Kenner and his co-defendant diverted the investor money to themselves. No more – or at least not for 17 years.