Broker Indicted in $3 Million Ponzi Scheme

Posted on April 6th, 2016 at 12:27 PM
Broker Indicted in $3 Million Ponzi Scheme

From the Desk of Jim Eccleston at Eccleston Law LLC:

A former broker working in Greenville, South Carolina has been accused of operating a long-running Ponzi scheme and has been indicted on federal wire charges. Claus C. Foerster of Spartanburg, South Carolina allegedly defrauded clients out of about $2.8 million while working as a financial adviser at Morgan Keegan & Co. and Raymond James Financial Inc.

From 2000 to 2014 Foerster allegedly convinced his clients to place their money into SG Investment Management, a completely fictitious company “created solely by [Foerster] solely to further his scheme to defraud.” In order for clients to move their money to this fake company, Foerster advised them to move monies from their brokerage accounts to their bank accounts so they may write checks payable to SG Investments, according to the indictments.

In an effort to further defraud his clients, the indictment alleges that Foerster provided his clients with “totally bogus earning statements.” Also, Foerster would continue to allocate new investments to some clients to make it appear as if the investment funds were returning profits.

The Financial Industry Regulatory Authority permanently has barred Foerster effective June 2014. According to FINRA’s BrokerCheck, he was a registered broker at J.C. Bradford & Co., Citigroup Global Markets Inc., and Morgan Keegan & Co. before he was let go from Raymond James in June of 2014.

If Foerster is subject to the maximum penalty for his wire fraud, he could face 20 years behind bars and a $250,000 fine. The case has been investigated by the U.S. Secret Service and will be prosecuted by Assistant U.S. Attorney David C. Stephens.

 The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

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