Michael Donnelly, formerly the president of Coastal Investment Advisors Inc. and its brokerage firm, has been sentenced to 99-months behind bars. Donnelly pleaded guilty to securities fraud and wire fraud that involved stealing money from older investors and unsophisticated investors.
From ’07 through the middle of ’14, Donnelly, a Florida broker, bilked clients and used the funds for his own expenses, including rent, private school tuition for his kids, golf club memberships, and car payments.
He gave investors bogus trade confirmations and account statements to keep the fraud going and claimed that their investments were doing well. In addition to his time in prison, Donnelly is permanently barred from the industry, has to pay $1.99M in restitution, and will serve three years of supervised release. Last year, the Securities and Exchange Commission filed civil charges against Donnelly.
In other senior fraud news, the Financial Industry Regulatory Authority announced that since launching its Securities Helpline for Seniors last year, customers have received back over $1.25m because of calls about possible elder fraud. Already, the hotline has answered 4,000 phone calls from people of all ages.
At the Securities Industry and Financial Markets Association’s yearly Private Client Conference, FINRA EVP Susan Axelrod commended financial firms that have gotten involved in identifying when older customers should be reimbursed because of fraud. In one example, a firm fired an advisor because this person gave an 86-year-old client a $200K promissory note to be repaid at a $1200/month. At that rate, the client would have to live for a long time to get all that money back. The elderly investor has since received full compensation.
In other efforts to combat elder fraud, the North American Securities Administrators Association is getting ready to unveil its training program to help brokers identify when they believe their clients may have become the victims of fraud. The program, called Senior$afe, is modeled after a program created in Maine to help bank and credit union tellers recognize signs of possible elder financial fraud. Now, a number of state securities regulators want to retool the program and use it to train brokers and advisors.
Our elder financial fraud lawyers at Shepherd Smith Edwards and Kantas, LTD LLP are here to help senior investors recoup their money. Contact us today.
Broker Michael Donnelly sentenced to prison after defrauding elderly, SEC says, InvestmentNews, April 13, 2016
FINRA’s Senior Hotline Results in $1.25 Million in Reimbursements, Wealth Management, April 7, 2016