John Gregory Schmidt Pleads No Contest for Fraud Charges
Have you suffered losses investing with John Gregory Schmidt (Greg Schmidt)? If so, the securities fraud attorneys at The White Law Group may be able to help you by filing a FINRA arbitration claim.
According to a press release, Securities and Exchange Commission (SEC) announced yesterday, that it has reached a settlement with John Gregory Schmidt involving his 128 count felony indictment for allegedly defrauding clients.
The SEC has reportedly ordered Schmidt, a former Wells Fargo financial advisor, to pay monetary penalties in excess of $1.1 million for allegedly defrauding elderly clients.
Schmidt, of Dayton, Ohio, was reportedly ordered to pay a monetary penalty of $864,301, an additional $235,614 of disgorgement to clients he wronged and $35,049 of prejudgment interest.
As we told you in January, Schmidt was reportedly arrested on December 27, 2018 when he was indicted on 124 counts of forgery, two counts of theft, telecommunications fraud and deceit by an investment advisor.
The SEC filed a complaint with the United States District Court for the Southern District of Ohio on September 25, 2018, in which it alleged that Schmidt sold securities belonging to seven of his retail brokerage clients to cover shortfalls in 10 other clients’ accounts.
According to the SEC, during a 14 year period, from 2003 to 2017, Schmidt allegedly made 62 unauthorized sales and withdrawals from variable annuities held by customers, totaling over $927,000, purportedly transferring the funds without their knowledge by using fraudulent letters of authorization as well as allegedly issuing false account statements.
From 2013 to 2017, Schmidt reportedly generated $230,000 in commission from customers who were the source of or recipient of misappropriated funds, according to the SEC.
The SEC complaint further alleges that “Most were elderly retirees with little to no financial expertise. Several of Schmidt’s victims were suffering from Alzheimer’s disease or other forms of dementia. At least five of Schmidt’s victims passed away during the course of his fraud.”
Schmidt reportedly had 325 retail brokerage customers, of which a large percentage were retirees who used periodic withdrawals from their accounts to pay for living expenses.
Schmidt was registered with Wells Fargo Advisors Financial Network from 2006 until October 2017 when he was reportedly fired for the scheme. Prior to that, he worked for Stifel, Nicolaus & Company from 2002 to 2006, according to his FINRA BrokerCheck report.
According to reports, he was doing business as Schmidt Investment Strategies, where he was the only registered broker and conducted all the trades.
Update on June 28, 2019
According to news reports this week, Schmidt received a five-year prison sentence for allegedly misappropriating more than $1 million from his clients, after pleading “no contest” to more than 120 counts. In addition to the prison sentence, Schmidt is reportedly required to pay more than $34,000 in restitution and faces five years of probation on release.
John Gregory Schmidt Broker Investigation
The White Law Group is investigating potential securities fraud claims involving John Gregory Schmidt and the liability his former employer, Wells Fargo may have for failing to properly supervise him.
Those investors that incurred losses investing with Schmidt may be able to recover those losses through the FINRA arbitration process.
Under FINRA rules and regulations, Broker-Dealers are responsible for supervising the actions of those advisors registered with their firm, and therefore may be held liable for the actions of their Broker(s).
For a free case evaluation or to discuss any other investment losses, please contact The White Law Group, at 888-637-5510, or visit us on the web at www.whitesecuritieslaw.com.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
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