December 16, 2020
A former broker associated with Mutual of Omaha Investor Services, Inc. (MOIS) in Oconomowoc, Wisconsin was recently entered into an agreement to plead guilty to charges of wire fraud.
Edward Matthes, who was associated with MOIS from April 2012 to March 2019 as an independent investment broker, executed a scheme to defraud his clients by persuading them to transfer funds from their existing accounts to new accounts at MOIS under the pretense that they’d see better performance—guaranteeing a minimum yield of 4% per year—on their investments. Instead of opening these new accounts, as promised, Matthes deposited their investment funds into his bank account for personal use. According to the agreement, Matthes defrauded $2.6 million from at least 23 clients in total.
The Securities and Exchange Commissions (SEC), who barred Matthes in February for this matter, alleged that not only did Matthes defraud over $1 million from his clients for personal use, but he also allegedly stole an additional $1 million by making unauthorized sales and withdrawals from his customers’ variable annuities. In an attempt to hide this misconduct, Matthes paid approximately $170,000 in Ponzi-like payments to certain customers and created fictitious securities documents and account statements to discuss the performance of their investments.
The plea deal Matthes has agreed to calls for a 13-year bar from participating in or having authority over any employee benefit plan. Each count of wire fraud carries a maximum prison sentence of 20 years and a maximum fine of $250,000.
Matthes’ FINRA BrokerCheck report reveals twelve customer dispute disclosures that were settled in 2019 related to this alleged misconduct. Settlement amounts ranged from approximately $50,000 to several hundreds of thousands, and nearly all customers received more than the damages requested.
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