42 months in prison for ex-wirehouse broker who stole $1.5M
A former wirehouse broker has been sentenced to 42 months imprisonment for stealing $1.5 million from clients, using some of the funds to lease two Mercedes-Benz automobiles, according to federal prosecutors.
Authorities say the now barred broker concealed his fraud through a variety of methods, including by creating falsified tax forms and lying to accountants. When a client confronted Marc Broidy about the theft, the former advisor repaid the wronged client by taking money out of a trust account for another client's children, federal prosecutors say.
Broidy, 43, had previously pleaded guilty to fraud charges in March. The sentence, which was passed down at a federal courthouse in Brooklyn, New York, on December 15, is to be followed by three years of supervised release, according to the Department of Justice.
U.S. District Judge Eric Vitaliano also ordered Broidy to pay $1,694,464 in restitution to his victims.
The fraud scheme started after Broidy formed an independent practice in 2010 ― Broidy Wealth Advisors in Los Angeles. Prior to that, Broidy was a broker with UBS. He also had previous experience at Merrill Lynch and Smith Barney, according to BrokerCheck records.
Broidy is accused of defrauding clients through three separate schemes, according to authorities. Broidy’s lawyer did not respond to request for comment.
Between February 2011 and July 2016 Broidy intentionally overcharged clients, using the excess fees to pay for personal expenses including his mortgage, vacations, and lease payments on two new Mercedes-Benz vehicles, per charges brought by the SEC in a separate court case.
His clients should have been paying an annual fee ranging from 1% to 1.5% of their assets under management, the SEC complaint says, and been billed on a quarterly basis. However, Broidy charged his clients at much higher rates, which resulted in the overbilling of advisory fees of approximately $643,000.
In order to cover up his misconduct, Broidy is said to have altered the management fees reported on clients' Forms 1099, which are issued by brokerage firms before being sent to clients or their accountants.
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The second scheme is said to have run between April 2015 and February 2016, where Broidy misappropriated $865,318 in assets from trusts for which he was the trustee. He covered up his personal use of the trusts’ assets by purportedly selling to the trusts shares that he personally owned in two privately-held, risky, start-up companies, according to authorities.
Lastly, the SEC says that Broidy “made material misrepresentations and omissions to advisory clients regarding their investments in privately-held companies with which he was affiliated.”
Bridget M. Rohde, acting U.S. Attorney for the Eastern District of New York, credited the FBI and SEC with assisting the investigation.