An Ohio-based former investment advisor pleaded guilty in federal court for her role in a Ponzi scheme that defrauded about $9.3 million from clients, according to the Department of Justice.
Tara M. Brunst was originally charged with co-defendants Raymond A. Erker and Kevin Krantz in September 2020 for perpetrating an investment fraud scheme that began in 2013. In Ohio federal court, Brunst pleaded guilty to conspiracy to commit mail and wire fraud, mail fraud and three counts of wire fraud.
According to the original indictment, Erker was an Ohio-based investment advisor representative and the owner of numerous investment and asset management companies, including Safeguard Wealth Management. Erker originally formed the companies in 2003; according to Brunst’s AdviserInfo profile, she joined Safeguard in 2015. (Krantz was the CFO for the Safeguard entities, according to the DOJ.)
The DOJ argued that Erker, Krantz and Brunst solicited and sold investments in two limited liability companies owned by Erker, telling investors that their funds would be used to purchase “annuities and senior secured notes … with no exposure to risk of loss and guaranteed rates of return” when neither of the LLCs were authorized to issue such offerings.
The defendants told investors their funds would be used for safe investments to provide guaranteed and increasing lifetime income payments, but the three defendants put the funds back into the Safeguard businesses, as well as into Erker’s personal bank account. The defendants would divert new funds to payments due to existing investors, telling the latter that the money was the already promised returns.
Brunst solicited at least 10 people to invest in the LLCs, failing to tell them that those companies were not actually issuing annuities or secured notes, that Erker owned the companies and that Brunst had an ownership interest in one of them, according to the DOJ.
“In an effort to make the investment operation appear legitimate, Defendants set up office fronts in Delaware and Nevada, contracted with call centers, and created false brochures, websites and account statements, purporting to show investors’ account balances, to prevent detection of the conspiracy,” the indictment read.
According to the DOJ, the scam ran through the beginning of 2018. Prosecutors originally filed their indictment against the three defendants on Sept. 3, 2020, and the cases against Erker and Krantz are ongoing, according to the DOJ.
An attorney for Brunst did not return attempts to seek comment.