A U.S. financial advisor is getting six years in prison for misappropriating more than $1 million from clients.
In a federal court in New York, former advisor Jeffrey Slothower was sentenced to 72 months in prison and ordered to pay US$1.16 million in restitution and forfeiture after he was convicted of investment adviser fraud, wire fraud and money laundering charges in connection with a scheme to defraud clients.
According to court filings, starting in 2016 through 2018, Slothower duped clients at his advisory firm, Battery Private Inc., by promising to invest their assets in bonds backed by homeowner association (HOA) fees.
Instead of buying the purported HOA bonds, he misappropriated their money, which was used for his own expenses and to make payments to other investors — falsely characterized as quarterly distributions — to sustain the scheme.
Additionally, Slowthower misled a lender when attempting to refinance a mortgage using money that was misappropriated from his clients, claiming that the funds came from the sale of his own assets.
In a parallel civil case that was filed in 2021, the U.S. Securities and Exchange Commission (SEC) also charged Slothower and Battery Private for allegedly defrauding investors and for submitting false information in SEC filings.
In addition to misappropriating money from clients directly, the SEC alleged that Slothower “made material misrepresentations in connection with private sales of a penny stock owned by Battery Private” — including claims that the penny stock companies owned over US$100 million in crypto assets — and overstated the value of the firm’s assets under management in its regulatory filings.
Those allegations haven’t been proven. The regulator’s complaint seeks disgorgement with interest, civil penalties, and permanent injunctive relief, among other remedies.