A client's worst nightmare is a financial advisor misusing their money. But that's exactly what the SEC says a Las Vegas-based financial advisor did by using his clients' money to participate in a pump-and-dump scheme.
Authorities alleged on Monday that Donald Toomer, an independent financial advisor with Wells Fargo's FiNet, helped facilitate a $13 million scheme — charges that his attorney denied.
"It's our position that the charges are baseless. Upon a full evaluation, Mr. Toomer will be exonerated of any and all charges," says Michael Critchley Sr., an attorney at Roseland, N.J.-based law firm Critchley, Kinum & Vazquez.
Last week, the SEC charged another individual, Samuel DelPresto, and his business with originating the scheme to manipulate the price of four stocks: BioNeutral Group (BONU); NXT Nutritionals Holdings (NXTH); Mesa Energy Holdings, (MSEH); and ClearLite Holdings, (CLRH).
DelPresto could not be reached for comment; his attorney declined to comment.
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DelPresto and a business partner, who is not named in the SEC complaint, organized reverse mergers of financially distressed companies with a shell company whose stock DelPresto and his business partner controlled, according to court documents.
DelPresto would jack up the stock price through manipulative trading and paid promotional campaigns and then sell their own shares, according to authorities.
The SEC says DelPresto, 47, recruited Toomer, 42, to buy the stocks in his clients' portfolios in exchange for kickbacks up to 10% of the total shares he had his clients buy. Toomer's purchases of the stock on behalf of his clients helped inflate the price, according to authorities.
The influx of cash also helped DelPresto fund his efforts, including promotional campaigns for the stock, authorities say.
For example, on Oct. 20, Toomer used client funds to buy approximately 200,000 shares of ClearLite at $1.06 per share. About 130,000 of those shares were sold by MLF, a Holmdel, N.J.-based company owned and controlled by DelPresto.
Andrew Calamari, regional director of the SEC's New York office, says that "Toomer abused his role as a financial advisor to help create the false appearance of market demand in these stocks and facilitate the pump-and-dump scheme."
DelPresto and his business, MLF, earned about $13 million from this scheme, while Toomer netted hundreds of thousands of dollars, according to the SEC.
Toomer has been affiliated with Wells Fargo since 2005, according to FINRA BrokerCheck records. He previously worked at RBC. At the time of the move, he and two teammates oversaw $144 million in client assets, according to On Wall Street reporting.
A Wells Fargo spokesman declined to comment on the case.
Toomer has no client complaints listed on his BrokerCheck record. He could not be reached for comment.
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