Investment Fraud at Large Financial Institutions

How many times have you heard someone setting the goal to become a millionaire by the time they reach 30? Kenneth A. Walsh from River Edge, New Jersey succeeded. Now 31 years of age, Walsh launched his investment advisor and broker career working for a large, registered financial institution in 2012, where he remained until June 2021. What a success story. Well, almost. The SEC charged Walsh with misappropriating (stealing) almost $3 million from over 100 clients from 2016 through 2021.

bags of money

 

Walsh’s story may make you think skipping financial investments in lieu of stashing money under a mattress isn’t such a bad idea. Or maybe playing it safe with your investments, instead of rolling the dice with an oil and gas or real estate deal or even investing in digital currency may not be the way to go. Why? Walsh was a licensed and registered investment broker and advisor. He worked for a large financial investment company. The people who trusted him with their life savings were playing it safe. They played by all the right financial investment rules and still, Walsh managed to pilfer their financial investments. At least, that’s what the SEC claims.

Fraudulent Transfers

Welsh purportedly misappropriated $2.59 million through 123 fraudulent ACH (Automated Clearing House) transfers. He transferred money from his clients’ investment accounts to Welsh family member credit card accounts. It appears Welsh’s family was not aware of the transactions. Welsh could have easily set up credit cards for people he knew if he had their identification information, including driver’s license and social security numbers.

Welsh used the funds to purchase luxury items, as well as take cash from the cards. One transfer of over $45,000 came from the account of an 88-year-old investor who was unaware of the transaction. Welsh transferred more than $39,000 from another 76-year-old investor’s account.

investment fraud - credit card transfers

Unauthorized Checks

Also, Welsh fraudulently obtained 14 checks from customers’ accounts which he used to pay for an automobile, buy gold coins and other precious metals, as well as pay for other personal expenses. In a few cases, clients signed a blank authorization form, in other cases, Welsh misrepresented the authorization form to them. And a few times, Welsh even was so bold as to edit the payee line on the check.

coins - cash

Tips to Spot or Prevent Investment Fraud

There were a few actions investors could have taken to prevent or limit Welsh’s financial fraud.

  • No blank documents. No matter how much you trust a person, warning signs should start flashing if you are asked to sign a blank document of any kind.
  • Review every transaction. Walsh was selling bonds to make cash available to steal. Each month, go over your investment accounts, looking for transactions. Or even though you may not want to transact business online, you can log onto your account and review transactions on a daily basis.
  • Get details of unusual transactions. Walsh transferred money from a retirement account to a non-retirement account in order to make cash available for his fraudulent financial scheme. Review transactions. Consider if you would like to keep more of your cash equivalent money with another institution. It may be less convenient, but perhaps that makes sense for you.
  • A second pair of eyes. Any time you grant access to your information to another, you increase your risk. However, if you have a spouse, maybe both of you should review statements. Maybe you have an accountant who does your annual tax return. Do they provide a service to review transactions quarterly to look for anything unusual? Grant as little access to your information as possible. Do not give them a log on to review transactions online.

The Walsh case is troubling. We tend to trust big financial institutions. After all, with all their processes (red tape) and internal review procedures, we trust they make these investment fraud situations all but impossible to perform. Investors must stay vigilant in all deals and transactions. Even when you are not investing in oil and gas, real estate, or cryptocurrency, your money is never 100% safe. Read all documents before signing. Review all transactions. If you have questions, ask someone other than the person you deal with all the time.

We hope all your oil and gas, real estate, and cryptocurrency investments are safe and profitable. And we know you’ll stay diligent in reviewing all your financial investments. But if you find yourself searching for an experienced oil and gas litigation lawyer or a commercial litigation lawyer, we are here to help.

Article References: SEC Complaint

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Mark Alexander is the principal of the Firm. In 1979, he earned his undergraduate degree at Wayne State University in Detroit, Michigan, and his law degree at Thomas M. Cooley, Lansing, Michigan, in 1985 (Academic Dean’s List).

Mr. Alexander is licensed…

Mark Alexander is the principal of the Firm. In 1979, he earned his undergraduate degree at Wayne State University in Detroit, Michigan, and his law degree at Thomas M. Cooley, Lansing, Michigan, in 1985 (Academic Dean’s List).

Mr. Alexander is licensed to practice law by the Supreme Courts of the States of Texas (1985) and Michigan (1988), and holds licenses before the following courts: Supreme Court of Texas; Supreme Court of Michigan; United States Court of Appeals for the Fifth and Sixth Circuits; United States District Courts for the Northern, Southern, and Western Districts of Texas; and the Eastern and Western Districts of Michigan. In addition he has been admitted in several other Federal and State Courts to represent Texas clients, who have been engaged in significant litigation in those jurisdictions.

Courts have appointed Mr. Alexander to serve as a receiver, and facilitator in complex litigation lawsuits. Additionally he has been a frequent lecturer for organizations on a variety of business law matters.  Mr. Alexander has also served as an Adjunct Professor of Business Law at Henry Ford College in Dearborn, Michigan. Significantly, Mr. Alexander is AV-rated by Martindale-Hubbell, the highest rating an attorney can receive.

Additionally, due to the complex nature of its practice, the Firm has an on-going relationship with a legal group that provides litigation support services. This group is comprised of a team of attorneys, whose combined capabilities allow the group to provide nearly 24-hour coverage at crucial times for any case. This arrangement is but one example of the innovative, cutting-edge approach that the Firm provides to its clients in order to improve representation at reduced legal fees.