Update: Chad Burroughs, according to 4/17/20 reports at Hartford Business Journal, was sentenced to 33 months in prison, to be followed by three years of supervised release. This stems from his misappropriation of $575,000 from his investment clients. He is currently free on a $100,000 bond and expected to report to prison on June 1, 2020, after pleading guilty to one count of wire fraud. The multi-year scheme ran from at least 2012 to 2019.
Former Torrington, Connecticut Financial Advisor Lester “Chad” Burroughs had been registered with Lincoln Investment in Torrington, CT since 2012. Mr. Burroughs has previously disclosed fourteen customer disputes according to the Financial Industry Regulatory Authority (FINRA) Brokercheck record, along with a regulatory disclosure referring to a fine that was imposed by the Insurance Commissioner in the State of Connecticut by way of an Acceptance, Waiver & Consent (AWC) where he neither admitted nor denied the facts alleged by the regulators. Mr. Burroughs appears to have operated a website at Burroughsinvestment.com and conducted his business under the name Burroughs Investment Group.
Allegations of Investment-Related Misconduct By Burroughs
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Mr. Burroughs’ FINRA Brokercheck reflects allegations that include unsuitable investment recommendations, failures to disclose, improper sales practices, lack of due diligence, misleading clients regarding certain products, and misrepresentation.
The SEC Allegations and Criminal Charges On Chad Burroughs
The SEC now charges Lester “Chad” Burroughs with alleged misappropriation of $560,000.00. The charges relate to sales of fictitious financial products, some of which were made to elderly investor clients, and using proceeds from new investments to pay off prior investors (or pay interest to other investors) and using other funds for personal use.
The alleged fraudulent scheme began in late 2012 and continued into early 2019, clients were promised 4% – 7% annual returns through Guaranteed Income Contracts (GIC investments). In reality, it appears funds were never legitimately or properly invested for clients, and Mr. Burroughs allegedly used fake account statements to perpetuate the fraud.
The SEC Complaint charges violations of anti-fraud provisions of the Investment Advisor Act of 1940. In a parallel action, the United States Attorney for the District of Connecticut announced criminal charges against Chad Burroughs.
Lincoln Investment is a broker-dealer firm with over 1,000 financial professionals nationwide and over $9 billion in assets under management. Financial advisors such as Mr. Burroughs must be properly supervised by firms like Lincoln Investment. Brokerage firms owe a duty to investor clients to properly supervise and monitor their employees. Supervisory responsibilities on the part of the firms are a critical component of the securities regulatory scheme. Firms and supervisors cannot ignore red flags and they have responsibilities to detect and prevent improper activity.
As noted in NASD NTM 03-49, brokerage firm supervisory systems are a basic component of self-regulation within the securities industry. An effective brokerage firm supervisory system plays an essential role in the prevention of sales practice and other abuses and, thus, enhances investor protection and market integrity. It is essential that firms monitor the regulatory histories of their associated persons and establish additional measures to supervise the activities of those associated persons with greater potential of creating customer harm.
Did You Purchase Investments Through Chad Burroughs Between 2012-2019?
The investment fraud lawyers at Haselkorn & Thibaut, P.A. are investigating these allegations and the investment activities by Chad Burroughs at Lincoln Investment. According to attorney Matthew Thibaut, Esq. “… seventeen disclosed customer disputes is fairly extraordinary, and one would have expected that Lincoln Investment was supervising this individual rather closely considering those disclosures…”.
Lincoln Investment has employed Mr. Burroughs for several years in Torrington, CT and this employment may have involved putting public investors at potential risk of investment recommendations involving possible fraudulent investments, as well as potentially unsuitable recommendations, and/or inadequate disclosures of material risks or sales charges, and/or other improper securities sales practices.
About Haselkorn & Thibaut, P.A.
Haselkorn and Thibaut, P.A. is a nationwide law firm specializing in handling investment fraud and securities arbitration cases. The law firm has offices in Palm Beach, Florida, on Park Avenue in New York, as well as Phoenix, Arizona, Houston, Texas, and Cary, North Carolina. The two founding partners have nearly 45 years of legal experience handling investment-related cases.
The Torrington, CT office used by Mr. Burroughs is only approximately 100 miles away from the Haselkorn & Thibaut P.A. office on Park Avenue in New York.
Haselkorn & Thibaut, P.A. has filed numerous (private arbitration) customer disputes with the Financial Industry Regulatory Association (FINRA) for customers who suffered investment losses relating to issues similar to those matters mentioned above. There are typically no depositions involved, and those cases are typically handled on contingency with no recovery, no fee terms.
Experienced attorneys at Haselkorn & Thibaut, P.A. are available for a free consultation as a public service. Call today for more information at 1-800-856-3352.