A pair of U.S. advisors were convicted of fraud for stealing upwards of US$10 million from their clients by dramatically overcharging them for advisory services, and other tactics.
On Thursday, a federal jury in New York convicted twin brothers Adam and Daniel Kaplan of various charges, including wire fraud, investment advisor fraud and conspiracy to commit wire fraud and money laundering, amid allegations that they took millions of dollars from approximately 100 clients, including elderly and other vulnerable investors.
According to court filings, between May 2018 and July 2021, the pair took advantage of their positions as advisors at an investment advisory firm, IHT Wealth Management, to steal from clients using various methods.
For one, they allegedly promised clients that they would charge annual fees of approximately 1%, but had clients sign advisory agreements that didn’t specify the actual fee, and actually charged much higher fees — sometimes four times higher than the promised rate.
They also levied charges on clients’ bank accounts, which they sought to hide by transferring funds from the clients’ own brokerage accounts, so the bank account balances didn’t change. Further, they used forged contracts to charge for services, such as “life coaching” and “divorce consultation,” that they didn’t actually provide to clients.
After their firm uncovered the fraud, IHT fired the pair in July 2021, but they continued to victimize former clients.
Between 2023 and 2024, Adam Kaplan promised to invest on behalf of certain investors, but used their money for his own expenses and later attempted to pay back victims using his parents’ credit cards by charging thousands of dollars on those cards and disputing the charges to avoid paying them.
Adam Kaplan was also convicted on additional charges of conspiracy to commit wire fraud, bank and wire fraud conspiracy, money laundering and attempted obstruction of justice.
While under a grand jury investigation into their conduct, between April 2023 and September 2024, Adam Kaplan allegedly sought to impede that investigation by paying a co-conspirator that he believed to be a violent felon with connections to the mafia to “tamper with, threaten, and violently injure victims of the defendant’s fraud schemes”; to find information that could be used to blackmail a federal prosecutor; and to attempt to bribe Department of Justice officials to put an end to the case.
“Adam and Daniel Kaplan demonstrated a pattern of deceit to steal millions of dollars from trusting investors, while the former threatened victims in an attempt to obstruct the federal investigation into the brothers’ misconduct,” said Christopher Raia, FBI assistant director in charge of its New York office, in a release.
“These defendants exploited the trust, vulnerability, and, at times, health of more than 100 victims to selfishly enrich themselves.”
In 2023, the pair was also charged with violating federal securities rules by the U.S. Securities and Exchange Commission, which was seeking injunctions, disgorgement plus pre-judgment interest and civil penalties in that case. The parallel civil action was stayed pending the resolution of the criminal case.