Chicago-based Stoltmann Law Offices is representing investors who’ve suffered losses from dealing with broker-advisors who have run Ponzi schemes right under their big-bank firm’s nose. Unscrupulous financial advisors have been known to steal clients’ money to pay for their lifestyle. As they are pocketing investors’ funds, they are often pitching investments like Ponzi schemes, which are fake and fraudulent investment schemes fueled by money flowing in from new investors.
Shawn E. Good, 55, from Wilmington, North Carolina, a former Morgan Stanley advisor, had “clients send funds to his personal bank account to supposedly make low-risk investments in real-estate development projects,” according to a U.S. Securities and Exchange Commission (SEC) complaint filed in federal court. “Good defrauded investors — including retirees — out of at least $4.8 million, resulting in more than $2 million of losses,” the SEC said.
A spokesperson for Morgan Stanley told Advisorhub.com the bank “is reviewing the matter and that the alleged conduct is plainly unacceptable. Good is no longer employed by the bank.” The Morgan spokesman added “We are currently reviewing the matter, which affects a small number of clients, and are cooperating with the SEC and other government authorities.”
Good’s alleged scheme follows the classic modus operandi of a Ponzi scam operator. According to the SEC, Good “used clients’ money to pay bills, reimburse other investors and to transfer cash on Venmo for transactions with subject lines such as ‘because you’re sexy’ and `Hotel for Destiny.’ Good also told clients that the bets he was making on their behalf were “low-risk and would pay returns between 6% and 10% over three to six months, but he never provided a written agreement,” according to the SEC.
Two of the hallmarks of a Ponzi scam are unsustainably high returns and using clients’ money for other purposes under a cloak of deception. Much of the stolen money is used by the perpetrator for lifestyle expenses. “Good, in fact, used those (client) funds to repay his earlier victims and also to pay his personal expenses, such as payments towards his Tesla, over $800,000 in credit-card bills, and Venmo transfers.”
If they are following the law, broker-advisors have to follow a set of rules to ensure that they are doing right by their clients. In the real world, though, this doesn’t always happen. Sometimes firms don’t supervise what their brokers are selling along with inappropriate and often fraudulent investment strategies.
If you are a victim of Shawn Good’s alleged Ponzi scheme, you may have a claim to pursue against Morgan Stanley through FINRA Arbitration to recover your losses. Please contact Stoltmann Law Offices, P.C. at 312-332-4200 for a free, no obligation consultation with a securities attorney. Stoltmann Law Offices is a contingency fee law firm which means we do not get paid until you do!
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