For five years, Phillip W. Conley scammed millions of dollars from churches, his friends and his adoptive parents to maintain a life of comfort and luxury in northern Florida.
The former Merrill Lynch, Wells Fargo and Citigroup broker will now spend seven years behind bars for the scheme that took advantage of 18 people in multiple states.
Conley, 38, of Jacksonville, was sentenced earlier this month to 87 months in prison after pleading guilty to one count of securities fraud this summer in the
As part of his plea agreement, Conley was also ordered to forfeit any property funded by his deception and pay a money judgement of $4,858,817.42.
According to court documents, Conley presented himself as an investment advisor who owned a sham company called ALPAX from 2014 to 2019. During this time, he lived and worked out of West Virginia, Washington, D.C., and Virginia.
Officials said Conley convinced his victims to invest in false ventures like high-yield, fixed-income securities, oil and gas technology, mineral rights, student housing, construction and timber leasing.
To keep the scam going and put investors at ease, Conley mailed his victims dividend statements claiming a positive rate of return for their investments. Conley fraudulently collected a total of $5.2 million dollars from his victims. Court documents state that Conley spent the money on private jet flights, expensive meals, clothes, jewelry, housing and living expenses for himself.
Only about $210,000 was returned to the victims, which included churches in the West Virginia towns of Charleston, Parkersburg and Morgantown. His adoptive mother and step-father, along with multiple small business owners, were also victimized.
“Securities fraud is a terrible crime and often has a devastating impact,” U.S. Attorney William J. Ihlenfeld said in a statement. “Mr. Conley was very persuasive and groomed his victims, convincing them that these were legitimate investment opportunities. Unfortunately, it was a scam in which Conley robbed investors of their life savings.”
Louis Straney, a securities litigation consultant and former regulator, called Conley’s case a textbook example of affinity fraud, which is a high priority for both law enforcement and regulators.
Affinity fraud is when someone targets friends, family and neighbors — or, in this case, fellow members of a religious congregation — who would never suspect their trusted advisor would mislead them.
“Unfortunately, studies have concluded that a great deal of affinity fraud goes unreported. (It is) much easier for these victims to believe that their advisors are honest than to be skeptical,” Straney said.
He added that the 87-month sentence is relatively significant and representative of a concerted effort to combat affinity fraud. But Straney said the seven years in prison isn’t a deterrent for these kinds of schemes, noting that only early detection is effective.
“The money is too significant,” he said. “It takes one person off the street for 87 months. But besides that, other people are drawn to the money.”
According to BrokerCheck, Coney was most recently affiliated with Merrill Lynch, working for the firm from 2012 to 2014. Before that, he spent two years with Wells Fargo and three years with Citigroup.
In December 2015, FINRA suspended Conley from association with any broker-dealer in any capacity for “failure to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance.”
Merrill Lynch was listed as the claimant in the associated arbitration, and court documents state Conley committed breach of promissory note and unjust enrichment. Merrill Lynch alleged that when Conley began working there, he received a loan by executing a promissory note.
Conley voluntarily resigned from the firm in May 2014, and he was sent a letter demanding that he repay the outstanding balance due on the note, which he failed to do.
At the time of the sentencing, Ihlenfeld urged anyone considering investing with a broker to first visit BrokerCheck to learn more about an individual’s past actions, sanctions and suspensions.
