Ex-Advisor Gets 22 Years in Prison for Fleecing Investors of $9M

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A former financial advisor was sentenced to nearly 22 years in prison for operating a Ponzi scheme that swindled $9.3 million from investors, according to the US Attorney’s Office for the Northern District of Ohio.

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Over a five-year period, Raymond Erker sold to at least 54 clients investments that he misrepresented as annuities and secured notes; The investments were purportedly low risk and had guaranteed returns. In reality, Erker and two co-defendants diverted client funds to their personal bank accounts and companies they controlled. The co-defendants, who aided in the scheme, previously pleaded guilty and were sentenced earlier this year.

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Photo Illustration by Barron’s Advisor; Dreamstime (2)

Their victims included widows, police officers, machinists, and friends and family members of Erker, according to local news site Cleveland.com, which reported that about 50 people attended Erker’s sentencing on Aug. 2.

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Erker concealed his misconduct by creating fake websites and account statements for investors. In addition, he contracted with call centers to field client calls. The former Westlake, Ohio advisor used funds from new investors to pay old ones, “the defining characteristic of a Ponzi scheme,” the Department of Justice said,

It’s not clear from court documents how and when authorities detected the Ponzi scheme.

“Mr. Erker misled, cheated and conned over fifty victims, many of them elderly, into trusting him with their life savings and hard-earned retirement funds, all for guaranteed rates of return and low-risk investments that were fabricated,” First Assistant US Attorney Michelle Baepler said in a statement. “Instead, Erker squandered the money he was entrusted with and caused financial ruin and pain for many.”

An attorney for Erker did not respond to a request for comment.

Erker, 52, got his start as an advisor in 1999, and worked at nine firms over the following 13 years, including Merrill Lynch, Lincoln Financial Advisors, and LPL Financial. LPL discharged Erker in 2010 for allegedly borrowing money from a customer without following firm policy, according to a note the company entered into his regulatory record,

Erker opened a registered investment advisor firm, Sageguard Wealth Management, in 2012. Ohio’s state securities regulator revoked Erker’s license and the firm’s registration in 2019, according to the state’s regulatory records. The Ohio Division of Securities accused Erker of nondisclosure of matters that shows “a lack of good business repute and is grounds for suspension or revocation of the Ohio investment adviser representative license,” according to a note contained in Erker’s regulatory record,

In 2020, federal prosecutors charged Erker with fraud, conspiracy to commit fraud, money laundering, and making false statements under oath. Earlier this year, he was convicted following a seven-day trial before US District Judge Dan Polster in Cleveland. The Justice Department credited Ohio’s securities regulator, the US Postal Inspection Service, and the Westlake Police Department with aiding in its investigation.

“Be suspect of anyone who guarantees that an investment will perform a certain way, because all investments carry some degree of risk,” Ohio Securities Commissioner Andrea Seidt said in a statement.

Write to Andrew Welsch at [email protected]

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Credit: www.barrons.com /

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