A financial advisor received a 52-month sentence after he admitted to spending nearly $1 million of his clients’ money on vacations, jewelry, private school tuition and other personal uses.
Naseem M. Salamah forged authorization documents disbursing more than $968,000 to bank accounts he controlled between August 2017 and May 2021 from those of three clients he selected “because he knew he could get away with his scheme” by targeting “elderly, infirm, non-sophisticated investors who blindly trusted the defendant to do good by them,” according to federal prosecutors’ sentencing memo. On March 24, a judge in the federal court of Rockford, Illinois,
The case provides only the latest example of a fraudster who cited
Allocations of client money to third-party accounts remains a “classic” fraud method that’s difficult for companies to track when bad actors forge documents used by RIAs and their service providers, according to Duane Morris partner Mary Hansen, a former SEC enforcement official who now counsels wealth managers and other financial services firms.
“What's really important is that the people who are processing these letters of authorizations for third-party transfers have to be very suspicious. It may sound jaded, but when you look through one of those documents, sometimes you can sort of tell that it's been pieced together,” Hansen said. “Once they send it out to a third party, then it's gone.”
Salamah had
“Naseem is genuinely sorry for what he’s done,” his attorney, Howard Rosenburg of Kopecky Schumacher Rosenburg, said in an email. “He’s made a serious commitment to making amends and getting his life back on track.”
NinePoint Advisors, the Coral Gables, Florida-based RIA that had previously employed Salamah in an office outside Rockford in Loves Park, Illinois, terminated Salamah in May 2021 based on the fraud allegations,
NinePoint’s latest SEC Form ADV
“Schwab has built its reputation on seeing the world through clients’ eyes and keeping them at the center of all that we do,” spokesman Peter Greenley said in a statement. “Schwab has reimbursed the impacted clients to make them whole. We are grateful for the efforts of the Department of Justice and the SEC in holding Mr. Salameh accountable for his crimes.”
Prior to joining NinePoint in 2013, Salamah spent three years with Morgan Stanley and five with MetLife Securities, BrokerCheck shows. Besides the 2016 bankruptcy filing, other disclosures on his record include a two-year suspension from FINRA in 2014 for allegedly failing to comply with an arbitration award to Morgan Stanley and a 2019 state-level case in Florida accusing him of failing to maintain an accurate Form U4. The SEC barred Salamah in September, when it
Salamah told the three “eldely advisory clients” he was diversifying their holdings and asked them to sign blank authorization forms transferring money from their accounts, according to the SEC. After adding payment amounts and information for a bank account he controlled as the recipient, he forged the signature of the RIA’s chief compliance officer and sent the fraudulently altered documents to Schwab for disbursement, the SEC says. The money later went to dinners, vacations, luxury car leases and tuition for his children, according to investigators.
Under the forfeiture provisions of his plea deal in the criminal case, Salamah agreed to the seizure of a white-gold necklace with a ruby. Of the three victims, two were in their late 70s or early 80s and suffering with various medical problems, according to the government’s sentencing memo. Salamah picked three clients out of his 230 in part because they’re not “sophisticated investors who monitored the market’s activity,” the memo states. He only reached out to the FBI to cooperate after detection of the scheme, according to investigators.
“Unlike a one-time error in judgment, the defendant stole money from Customers A, B and C day-to-day, month-to-month and year-to-year,” the memo states. “At any time over the course of almost four years, the defendant could have stopped, but the defendant did not. It was only because Customer A’s accountant questioned Customer A’s daughter about unaccounted for distributions that the defendant was caught. In fact, there is no reason to believe that the defendant would have ever stopped if Customer A’s accountant did not happen to inquire.”
In the sentencing, U.S. District Judge Iain Johnston tacked on an additional month to the government’s requested prison sentence of 51. The sentence will begin in May at a facility that Johnston recommended to be nearby geographically with a Residential Drug Abuse Program and mental health capabilities, court records show. Under his mandatory two years of supervised release afterward, Salamah can’t use any controlled substances, work in “any investment/financial advisor position” or contact any of the victims, according to the sentencing.
As part of their argument for a longer sentence in the government’s memo, prosecutors had specifically cited Salamah’s former profession.
“People place an enormous amount of trust in financial advisors,” it reads. “Many people do not have the time and knowledge necessary to manage their own retirement savings, so they rely on financial advisors to guide them. There is not much more financially devastating than an individual whose decades worth of savings are wiped out with not enough time to recoup the money. Financial advisors, like the defendant, must be deterred from causing such pain and angst.”
