A former advisor, who was barred by FINRA in March, was arrested and charged with stealing more than $2.1 million from two longtime clients he served while employed at Royal Alliance Associates, according to the New Jersey District Attorney’s Office.

Image: ThinkStock
Image: ThinkStock

Gary Basralian, 70, defrauded the clients by telling them that he would invest their money in Royal Alliance brokerage accounts or in real estate and high-interest loans, but instead used the funds to pay for personal expenses, including BMW car payments and credit card bills, prosecutors claimed.

He allegedly misappropriated at least $1.4 million from one client and at least $738,000 from the other over a 10-year period from July 2007 through November 2017, according to the criminal complaint.

Basralian was charged with two counts of wire fraud and one count of investment advisor fraud. If convicted, he faces up to 20 years in prison.

Basralian did not return a voice message seeking comment. Information about Basralian’s attorney was not available as the criminal complaint is under seal.

One of the victims, who routinely provided funds to Royal Alliance investment accounts managed by Basralian, began addressing checks to "Masters Financial" based on Basralian's representations that they would ultimately be deposited into her accounts but instead wound up in an account controlled by Basralian, New Jersey prosecutors claimed.

"He told her to send funds to that account and stole those funds," said Jonathan Kurta, a New York attorney representing the 70-year-old victim in an arbitration against both Basralian and Royal Alliance, which is owned by IBD firm Advisor Group.

The other victim, a 53-year-old widow whom Kurta is also representing, suffered a significant brain injury from a car accident in the late 1980s and later lost her husband in a plane crash. She received substantial settlements from both tragedies.

"Those were funds that were supposed to last her for the rest of her life," Kurta said.

In 2009, Basralian allegedly began wiring funds from the 53-year-old's investment account into various accounts that he controlled and used the funds for his own benefit. When she questioned Basralian about why her account balance had fallen, he sent her a phony spreadsheet showing that her money was being invested as loans to various companies that would be paid back with interest, prosecutors claimed.

Basralian worked for Royal Alliance from November 1989 to December 2017, when he was permitted to resign over a client complaint alleging he "invested a substantial portion of the client's funds in a number of suspect investments" and that he "misappropriated monies that belonged to the client," according to the SEC's public disclosure report.

In March, FINRA barred him from the brokerage industry for failing to cooperate with the regulator's investigation into his alleged misconduct at Royal Alliance.

Emma Smith, a spokeswoman for Royal Alliance declined to comment, saying it does not comment on pending litigation.

The two victims whose names are not disclosed in the complaint were not the only victims of Basralian's alleged criminal conduct, according to Kurta, an attorney with law firm Fitapelli Kurta. He and another attorney, Adam Gana of New York law firm Gana, are representing two additional victims and believe there are others.

"He intentionally preyed on his most vulnerable clients," Kurta said, explaining that most were elderly widows with physical and mental handicaps.

The four victims who have filed arbitration claims so far are seeking a collective $10 million in damages, he said.