A Wisconsin-based advisor pushed high-risk investments on clients, but pocketed the funds clients gave him, according to dual charges filed by both the Securities and Exchange Commission and the Department of Justice.
Anthony Liddle pleaded guilty in Wisconsin federal court this week to charges of wire fraud, which carries a maximum penalty of 20 years in prison, according to the plea agreement. According to the SEC and DOJ, Liddle bilked about $1.9 million out of 13 clients, many of whom were retirees.
Liddle, the head of Wausau, Wis.-based Prosper Wealth Management, was accused of touting ‘L’ Bonds from GWG Holdings as lower-risk alternatives, while the prospectus warned they were high-risk and that someone could lose their entire investment.
According to SEC charges, Liddle’s misconduct stretched from June 2019 through May of last year.
He was affiliated with Western International Securities until April 2020, according to his BrokerCheck profile. That firm is the subject of the SEC’s first action related to violations of Regulation Best Interest. However, Liddle was not accused of violating the rule, as the firm and several of its advisors were last year. (WIS is a hybrid broker/dealer owned by Atria Wealth Solutions).
In the Reg BI-related action, the SEC argued that WIS and several of its reps violated the care and disclosure obligations in the rule by recommending the L Bonds, which funded purchases of life insurance policies. In 2022, GWG Holdings suspended the sale of the proprietary bonds, but between July 2020 and April 2021, WIS reps sold more than $13 million of the securities to retail customers, some of whom were retirees with moderate risk tolerances, according to the commission.
Liddle first founded Prosper Wealth in 2016, offering securities and advisory services through WIS, which is not named in the SEC complaint, and worked with more than 150 clients. In conversing with clients, he would misrepresent the risk of the GWG L Bonds, convincing some of them to sell existing holdings.
Then, he would direct them to send the new funds to his firm, telling them he’d buy lower-risk securities. Not only was Liddle misrepresenting the investments, but he was also not purchasing them after getting the money, according to the SEC. Instead, he falsified account statements and paid for interest payments straight out of clients’ funds.
In some cases, he told clients he’d purchased GWG bonds even during periods in which sales of the bonds were suspended. In one instance, Liddle convinced one elderly client that the L Bonds were available, so she filled out an application to buy the bonds and sent a check to fund the investment in May 2021, despite the fact that they could not be purchased.
In April 2022, he convinced another client to exit their annuity and invest in the bonds; the client do so, paying a penalty of nearly 20% of the annuity’s total value, according to the commission.
The SEC declined to comment beyond the public filings.
While the charges against WIS and Liddle were interrelated by the GWG bonds, the accusations against Liddle seemed “a lot worse,” said Max Schatzow, an attorney and co-founder of RIA Lawyers.
“This wasn’t just him recommending some high-risk security,” he said. “This was taking the money, pocketing it, and not buying the security he was telling some clients he was buying.”
Last year, FINRA barred Liddle from associating with any FINRA member, and Wisconsin’s Division of Securities also permanently barred him from the industry in August. In addition to a potential prison sentence, he faces disgorgement and a civil penalty, as well as an industry bar from the SEC.
Comments are closed, but trackbacks and pingbacks are open.