A former financial advisor who claimed that he was retiring more than a decade ago, after being suspended by the U.S. Financial Industry Regulatory Authority (FINRA), actually just began operating a Ponzi scheme, U.S. authorities allege.
A federal grand jury in California indicted a former advisor, Edwin Emmett Lickiss, Jr., on one count of wire fraud and one count of money laundering in connection with an alleged US$9.5 million investment fraud scheme.
Lickiss, who operated his own firm, Foundation Financial Group, was first registered as a broker in 1987. According to the indictment, he purported to retire from the securities industry in 2014 after FINRA suspended his licence for failing to disclose liens filed against him by U.S. tax authorities.
Yet, instead of retiring, it’s now alleged that he continued to solicit investors in an alleged Ponzi scheme.
“To induce his victims to invest their money with him, Lickiss claimed he had exclusive access to fictitious bonds that paid very high rates of returns, including rates in excess of 20%,” U.S. authorities alleged.
To convince investors that their money had been invested as promised, he allegedly gave investors fraudulent promissory notes that claimed to track investors’ fake bond holdings. He also allegedly paid purported returns to investors to perpetuate the scheme — but those payments were made from the assets of new investors.
The DOJ alleged that the scheme took in at least US$9.5 million from investors. In a parallel civil complaint, the U.S. Securities and Exchange Commission (SEC) alleged that the scheme took in at least US$12.7 million.
“Bank records reflecting the invested proceeds show that Lickiss used the majority of investor funds to make Ponzi payments to other note investors or to pay for his personal expenses. Indeed, it appears that most, if not all, of the investment proceeds were never invested as he represented, but simply were stolen by him or misused to keep his scheme afloat,” the SEC’s complaint alleged.
None of the allegations have been proven, and he is presumed to be innocent of the criminal charges.
Lickiss is scheduled to make his first appearance in court on Tuesday in San Francisco.