Do you think people would fall for this? Apparently they have ...again. Mark Spangler, former head of NAPFA (National Association of Personal Financial Advisors) is headed for prison for 16 years on a conviction of fraud.
Former NAPFA Chairman Spangler gets 16 Years for fraud, must pay $19.8M in restitution
He had custody of client assets and used the assets not to invest in publicly available funds but into venture capital companies. He provided clients with statements showing how much they supposedly had in publicly traded issues--absent specifics. Some questioned this, but he apparently talked his way around it.
This story comes in different guises, but it is the same. The twist here is Mr. Spangler's high profile.
A couple of asides. First off, his firm had more than $100 million under management. My guess is that just playing it straight up would give Mr. Spangler a salary of probably in excess of $500,000! What did the man want? Secondly, investors could have been greedy themselves. This is just a guess. I know when something like this surfaces everybody acts like they didn't know what was going on. In fact, if one of the venture capital companies hadn't gone under, Mr. Spangler's scheme may have continued. Just saying. Thirdly, this isn't rocket science; and investors will hopefully learn one day. Get statements from a third party, and don't let the advisor have custody. Revisit the Madoff case and see how he made off with client money.
Oh yeah, Richard Whitney served time in Sing Sing for his embezzlement activities.