Advisor gets prison time after elderly clients lose millions
Barred advisor Melvin Leonard Wimmer Jr. has been sentenced to 75 months in prison and five years of supervised release for securities fraud, according to the Department of Justice.
The court has also ordered that the former head of Cornerstone Capital — founded in 2007 — to pay $3 million in restitution.
Wimmer, 53, pleaded guilty to the fraud charge back in May. He is said to have issued false account statements to his investors. Afterward, he began trading options and futures and continually lost money during the life of his scheme.
“This prosecution illustrates the devastating impact that financial fraud inflicts on many Americans,” U.S. Attorney for South Carolina Sherri Lydon said in a statement. “Sadly, many of the victims in this case are elderly and lost all of their retirement savings. A free market system cannot function without integrity in the financial markets.”
One high-net-worth client with more than $20 million in assets took the majority of the losses, the regulator says.September 24
Former advisor Paul Marshall's prison term "will be little solace to the dozen victims who lost their life savings due to his greed and callous concern for their well-being,” the FBI says.May 11
Rather than report the losses, Wimmer is said to have emailed his investors monthly account statements that falsely listed gains of 8% to 10% annualized basis, the U.S. Attorney’s Office says. Wimmer is also said to have had manufactured and distributed false account statements from the start, which he continued to do until the plot fell apart.
Requests for comment from Wimmer's lawyer were not returned.
“Wimmer also falsely represented the expected gains from trading, including the past performance of his trades, and he failed to inform the investors of the high risk of trading futures and options,” the U.S. Attorney's statement reads.
Between 2010 and 2017, 25 people invested $3.6 million with Wimmer. Of that, he lost approximately $3 million, the bulk of which came from senior clients’ retirement savings.
“It’s a sad case, particularly when you see how many [victims] were older and lost retirement savings,” U.S. Attorney Rhett DeHart — who prosecuted the case — says.
DeHart was grateful that he hasn’t seen too many cases in which a financial advisor has taken advantage of clients. But noted that “when you do see it almost always ends badly” for everyone involved.