Wiped out: Ex-broker guilty of hiding major losses from clients

Former broker Richard G. Cody has pleaded guilty to federal charges that he defrauded clients, including three Verizon retirees, by allowing them to draw down principal from their savings when they thought they were taking only profits.

One former client lost her entire savings with Cody and two others, a married couple from Maryland, unknowingly spent years whittling down their $1.26 million savings to $165,000 through principal withdrawals.

The lawsuit, filed in U.S. District Court in Massachusetts in September 2017, charged Cody with fraud and lying under oath to the SEC in an earlier case filed by the commission.

Andrew Harrer/Bloomberg

Cody's regulatory troubles began in 2008 when FINRA filed a complaint against him for excessive trading in client accounts and for sending them false or misleading statements. The following year he launched an RIA, Boston Investment Partners.

Ultimately, FINRA banned him from the industry for a year in 2013, five years after first filing a complaint against him. But he continued working through his RIA for at least another three years, according to the Justice Department and FINRA's public BrokerCheck records.

Cody's lawyer in the Justice Department case, Scott Lauer, declined to comment and said Cody was not available.

Cody wired one widowed client thousands of dollars of his own money to conceal the fact that both before and after the death of her husband, his savings had declined to $55,000, the Justice Department lawsuit says.

After that money, too, was gone Cody continued to wire over sums, ultimately sending tens of thousands of dollars to her and another client, according to a source who asked not to be identified.

"With their prime working years now well behind them, Cody’s deceptive scheme has irreparably damaged their financial security," according to the SEC.

Cody's sentencing is scheduled for Feb. 4.