Gold Stash in Broker's Basement? Bought With Client's Money, FBI Says
A former Securities America broker put $1.3 million of an elderly client's money into gold and silver bullion that he kept in his basement as a purported investment. But, in reality, it was an elaborate fraud, investigators allege.
A federal grand jury has indicted Mark Preston French of Westerville, Ohio, on 16 criminal counts ranging from wire fraud to money laundering. Seven of those counts carry maximum 20-year prison terms.
In June 2009, French allegedly persuaded an elderly client to allow him to begin investing in gold and silver bars and coins through a joint account he opened with her at a bank.
Yet over time, the indictment says, French siphoned off tens of thousands of dollars from this one client for his personal use.
French allegedly began working with the client while he was at then-independent broker-dealer Investors Security in Westerville, Ohio. Securities America purchased the company in 2012, and touted its "outstanding recruiting results" in bringing over 130 brokers.
One of them was French, but he remained with his new firm for just two months, French's FINRA BrokerCheck report shows.
A spokeswoman for Securities America says the firm would have no comment on the case. French, who is no longer registered with FINRA, could not be reached for comment. His lawyer, James Gilbert of Dublin, Ohio, could not be reached.
'FIGHT OVER PROFIT'
In April 2013, after the FBI removed the gold and silver from his home, French made the unusual move of suing the U.S. government in an attempt to force the return of the bullion.
"Many of the seized items are protected by the attorney-client privilege, and French needs these items for pending civil litigation," his complaint argues. "His personal business is paralyzed."
French attempted to convince the court that the dispute with his client was not a criminal matter and that his client not only lost no money, but "made a better than 10% profit" by investing in gold and silver.
"Any allegations of wrongdoing are civil in nature and boil down to nothing more than a fight over how much profit could have/should have been made," the complaint continues.
Five months after French filed his suit, he reversed course and the judge on the case granted his request to drop the complaint against the government. His arraignment is scheduled for June 16.
As for the fate of the gold and silver bars and coins?
"They are in safe custody," says Dale Williams, the U.S. prosecutor on the case.
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