Prison Break: Advisor Gets 14 Year Sentence For Stealing Client Funds

Don’t do it. Should we really have to say it? Seems that we do. Don’t ever take a dime, or re-direct a dime, of client money outside the boundaries of rules and regulations. You will get caught. Just ask Steven Pagartanis.

Per media reports:

“In December, Steven Pagartanis pleaded guilty to conspiracy to commit mail and wire fraud stemming from an 18-year scheme in which he convinced more than a dozen clients — mostly older women — to invest in two publicly traded companies, only to launder the invested money through a series of shell companies and private accounts that he controlled.”

“Pagartanis used some of the money he collected to pay out promised returns to earlier clients in what authorities described as a Ponzi-like scheme.Other funds went to bankroll personal expenses, including massages, jewelry, clothing, airline tickets and cigars. He also channeled hundreds of thousands of dollars to his wife’s failing pet store, which was losing between $7,000 and $8,000 a month, according to a U.S. attorney’s sentencing memo.”

An 18 year scheme feels like a virtual lifetime. And for his victims it will affect them and their families for a lifetime – making the punishment fit the crime.

A word about firms that you may have never heard of, and their ability to police this type of activity. While we don’t want to paint one firm or another with too broad a brush – it is much more rare to hear about a story like this at Morgan Stanley or Raymond James.

If you haven’t heard of the firm that the offender is employed at, be very, very careful. Seems like common sense – but this stuff keeps happening.