Securities Arbitration Lawyers BlogFormer Smith Barney, Raymond James, and Morgan Keegan Broker Claus Foerster Indicted for Fraud
A grand jury of the U.S District Court in Spartanburg, S.C. indicted former broker Claus C. Foerster (CRD# 1912949) for defrauding clients of $2.8 million over a 14-year period.
Foerster perpetrated the fraud from 2000 to June 2014 while employed as a financial advisor at Smith Barney & Co., Morgan Keegan & Co. and Raymond James Financial Inc., according to an indictment filed March 8, 2016 in the U.S. District Court in Spartanburg, S.C.
The charges follow the Financial Industry Regulatory Authority Inc.’s 2014 decision to bar Foerster from the brokerage industry due to allegations that he was running a Ponzi scheme.
According to an Investment News report, Foerster lured clients to invest in SG Investments, a fictitious company that Foerster created to perpetrate the scheme, promising higher returns than the brokerage firms that employed him. Foerster would then advise clients to withdraw funds from their brokerage accounts and deposit the money into their personal banking account, according to the report. The deposits were then transferred to him in the form of a check.
According to the report, Foerster kept the $2.8 million for his own personal use but would sometimes provide statements he fraudulently created to make clients believe they were profiting off their investments in SG Investments.
Transferring funds from your brokerage account to your personal account in order to facilitate a transaction should immediately raise red flags, as it helps conceal fraudulent activity and there really is no good reason otherwise for doing so. If you have lost money in this fashion, you may be able to recover losses from your brokerage firm for failing to supervise the rogue broker.
Silver Law Group represents the interests of investors who have been the victims of investment fraud. If you have questions about your legal rights, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.