Ex-Advisor Bilked Elderly Clients of $1M in 'Ponzi-Like' Scheme, SEC Charges
Forged documents, fake accounts, fancy cars -- it sounds like every investor's worst nightmare.
The SEC has charged a former advisor with defrauding elderly clients, including a relative, of nearly $1 million over a four year period and eluding detection with fake statements, signatures and gains.
Levi Lindemann, 38, allegedly solicited six investors for a variety of investments, but never invested the money as promised, authorities claim.
In a complaint filed last week, the SEC alleges that, from 2009 to 2013, Lindemann transferred funds into accounts in his own name, or those of firms he controlled. Authorities say he spent the money on himself, using it to buy two cars worth about $100,000, pay his taxes and make "Ponzi-like" payments to investors to continue his businesses, court documents show.
The alleged fraud went undiscovered, authorities say, because Lindemann provided fake account statements, forged documents as proof of client investments and used money from new investors to keep making payments to existing clients.
The SEC says Lindemann "appears to be continuing his fraudulent schemes." The regulator is investigating how Lindemann raised another $3.3 million from clients for various ventures, as recently as August 2014.
Lindemann, a resident of West Lakeland, Minn., allegedly told his clients that he would invest their money in several investments, including secured notes in a real estate investment company, HomePath Financial; life insurance policy-backed notes from GWG Life; and interest in a unit investment trust through one of his two firms, Alternative Wealth Solutions.
Neither that firm nor his other firm, Gershwin Financial, were FINRA members. They also were not registered with the SEC or the State of Minnesota as broker-dealers or investment advisors.
Lindemann and his lawyer, Paul Engh, did not return calls seeking comment.
Beau Mayfield, chief compliance officer for GWG, said in an email to On Wall Street that “we have no record of selling any securities through Levi Lindemann or his entities, and we have been in dialogue with, and have cooperated with, the SEC on this matter.”
In one of the alleged activities, Lindemann raised $276,000 over a two year period from three elderly clients, including a third cousin, to buy HomePath secured notes, according to court documents. He allegedly told the clients that the firm was buying, renovating and reselling distressed properties to pre-qualified buyers and that the notes would provide monthly dividend payments of 9%.
Clients received payments in the form of cashier's checks drawn from accounts controlled by Lindemann, authorities say. For the third cousin, Gene Lindeman, and one other client, payments had stopped coming by January 2013, according to court documents. Levi Lindemann provided his clients fake HomePath secured notes, which he modeled after blank copies and other materials he requested from the company in 2009.
Jeff Kleiner, president of HomePath, says he was unaware of Lindemann's activities and his firm has not done business with him.
'MY CONCERNS MOUNTED'
According to court documents, Gene Lindeman, 74, of Cumberland, Wis., said he invested about $165,000 over a two-year period with the younger Lindemann, who presented himself as an investment advisor. The cousin said he was promised at least 9% annual returns on his investment, court records show.
Initially, the promised monthly payments were recieved. "These were cashier checks, but they cleared and their amounts seemed to correspond with the dividends Levi had promised me I would receive monthly," Gene Lindeman said, court documents show.
When the payments stopped, the elder relative said he was told the funds had ceased coming to avoid double taxation, due to changes in tax laws. After that, he said his calls often went unanswered, court documents show. "I requested a redemption from Levi. Months passed, and my concerns mounted."
'LYING TO ME ALL ALONG'
The cousin said he eventually received a redemption in June 2014 and that his relative came to see him at his Wisconsin home later in November.
"During that visit he confessed that he had never invested my money with HomePath. He told me he had been lying to me all along about having done so. … He told me that until that moment he hadn't been 'man enough' to simply come out and tell me that he had never invested my money with HomePath," the older relative told regulators.
Authorities are charging Levi Lindemann with violations of the Securities Act and the Securities Exchange Act. The SEC requested a trial by jury.
U.S. District Court Judge Patrick Schiltz in Minnesota granted a court order freezing Lindemann's assets.
Lindemann worked from 2010 to 2012 at J.P. Turner & Company, an independent broker-dealer, according to his FINRA BrokerCheck file. A spokeswoman for the firm confirmed that he was no longer employed there.
He also was previously employed at two small broker-dealers: Workman Securities Corporation from 2009 to 2010 and United Equity Securities from 2008 to 2009. Both firms have since closed their operations. Though employed at two brokerage firms during the time the alleged fraud ocurred, the SEC does not name them in the complaint.
Lindemann has no disclosure events on his BrokerCheck record.
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