Wells Fargo Investment Advisor Operated Ponzi Scheme

John Greg Schmidt, a broker who used to work for Wells Fargo, was indicted on 128 counts of felony related to securities fraud in his role as a financial advisor by the prosecuting attorney in Montgomery County, Ohio.

He created a Ponzi scheme in order to bolster the accounts of certain clients by stealing money from other accounts. He committed 124 counts of forgery, two counts of theft from an elderly or disabled adult of more than $150,000, one count of telecommunications fraud over $150,000 but under $1m, and one count of fraud or deceit by an investment advisor of more than $150,000. He created false financial statements for investors in an effort to cover up missing investments. He also sold securities without the knowledge or authorization of investors and received commissions on this of nearly $250,000.

A federal civil lawsuit has been filed by the US Securities and Exchange Commission (SEC). According to SEC’s complaint, Schmidt sold securities of at least seven of his customers and secretly transferred more than $1m in proceeds to 10 other customers to cover shortfalls in their accounts. Schmidt operated Schmidt Investment Strategies Group in Ohio and was employed by Wells Fargo for 10 years until he was discharged from the firm in late October 2017.