Robert Louis Cirillo, 61, based in Chino Hills, formerly a stockbroker, has pleaded guilty to the deception of over a hundred victims and running an investment fraud scheme amounting to $3.2 million.
This was recently revealed by the U.S. Department of Justice (DOJ) who, in a news release, also mentioned that the money he collected in the form of investments, went into financing his lavish lifestyle and paid for an Alfa Romeo and a Jeep, a trip to Las Vegas, along with various credit card payments.
Additionally, through a ‘relative-in-distress’ scheme, he also managed to rob $400,000 from an elderly man.
A single count of conspiracy to commit wire fraud, one of filing a false tax return, and one count of securities fraud is what Cirillo has pleaded guilty to, and faces a prison sentence of a maximum of 43 years. The sentencing will be in the first week of September.
According to prosecutors, Cirillo perpetrated the fraudulent scheme between 2014 and 2021. His modus operandi was to target populations of low-income Hispanics with the promise of returns that could go up to 30% for a period of 90 days, by putting their money in short-term loans for construction. Using classic techniques of fraud, Cirillo produced phony statements designed to demonstrate the strong growth of their investments. A total of $3.2 million was lost by victims in this scheme.
The ’relative-in-distress’ was a relatively new scheme that he pulled on an elderly man in 2021 by attempting to convince him that his grandson had been arrested for possession of banned substances. Co-conspirators of Cirillo convinced the gentleman to remit $399,550 for the bail of his grandson. Some of this money also found its way into Cirillo’s personal expenses as shared by the authorities.
Cirillo has also admitted to filing income tax returns that were false. This was for 2015, 2016, and 2017. In essence, in these returns, he failed to disclose over $3 million in income received from the investment fraud. Specifically for 2017, the amount was $1.9 million while his filed return reported an income of $30,985.
The taxes that were lost as a result amounted to $675,898, according to the DOJ.
Common Stock Broker Fraud
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There are several different types of stock broker fraud, and each can lead to the criminal prosecution of a stockbroker. Here are a few of the most common types of stock broker fraud: Misrepresenting the nature and risks of an investment, Giving clients misleading facts, and Forgery. If you believe you’ve been a victim of stock broker fraud, contact a criminal defense lawyer to discuss your case and protect your future. A lawyer can help you develop a strong defense or negotiate a favorable plea deal.
Misrepresenting the nature and risks of an investment
Investment fraud is a crime where a stock broker or other person makes an untrue or misleading statement about an investment. It can also involve omitting important information or making statements that may be misleading. The misrepresentation may include omitting important facts, such as the sales commission and liquidity of the investment. The broker may be also in violation of federal securities laws if he or she fails to follow the instructions of a customer when selling an investment.
It is crucial for a stock broker to understand their client’s financial situation and risk tolerance. A stockbroker must only recommend investments that are suitable for their clients, and they must not misrepresent facts about investments to investors. Among the most common misrepresentations by stockbrokers is not disclosing the risks or liquidity of an investment. In addition, a stockbroker must disclose all relevant information about an investment.
Giving clients misleading facts
In addition to financial advisors’ responsibilities to provide clients with accurate and complete information, brokers are also required to explain the risks associated with their investments. Failure to do so can lead to inaccurate information and, ultimately, liability for the client. A violation of FINRA rules and federal securities laws is giving clients misleading facts. The SEC is taking steps to educate investors about the tactics used by fraudulent brokers and investment firms. The SEC has released video examples of investment fraud to illustrate the importance of educating clients.
A recent example of stockbroker fraud involves the use of shell companies to hide debt and offer investors products that are not worth the investment. Enron, a Houston-based energy company, was found to be a prime example of this. Its salespeople peddled stocks that didn’t deserve the price they paid and used false revenue statements to trick investors into believing the company was stable.
Misappropriating funds
Fraudulent stockbrokers use a variety of techniques to misappropriate funds from their clients. Some stockbrokers recommend that their clients open investment accounts at an illegal address or falsify information on the account application. Others may place client funds in their own accounts or even create fictitious ones. These activities are illegal and often affect elderly investors. Here are some signs of broker fraud. Listed below are some common forms of broker fraud:
In addition to misappropriating funds, some stockbrokers are guilty of fraudulent investment schemes. For example, one company reported $2 million in revenue when it actually sold only fruit baskets and PC memory cards. They forged documents to inflate their earnings by 40 million in two years. This stockbroker fraud cost over 20,000 investors their entire investment. In addition to wrongful investment practices, securities fraud can also happen online.
Forgery
Many of us have heard about the dozens of well-publicized cases of brokers stealing money from customers and investors. Unfortunately, hundreds of similar cases occur every day. It is important to avoid broker fraud as much as possible and to educate yourself about the consequences. Here are some warning signs of stock broker fraud. Not all losses are indicative of a stock broker fraud, but any loss is a red flag. A broker that is not registered with the FINRA or the SEC is not likely to be trustworthy.
Forgery plays a key role in stockbroker fraud. A stockbroker who forged documents can deceive investors into believing that they are investing in the right products. A recent case involved a broker who forged withdrawal slips for three accounts belonging to elderly people. These withdrawal slips were signed by the investors, but the broker did not disclose that they were signing for a much lower interest rate. To hide the fact, the stockbroker used software called DocuSign to digitally forge their customers’ signatures.
Trading ahead
While stock brokers are bound by a fiduciary duty to their clients, they must also put their clients’ best interests ahead of their own financial interests. Common industry practice is trading ahead of a customer’s order, but this practice disadvantages the customer. Consequently, FINRA rules prohibit trading ahead of a customer’s order. This article will discuss why trading ahead of a customer’s order is considered stock broker fraud.
Trading ahead of orders is a form of stock broker fraud in which brokers take large amounts of money from a small number of clients. One major ‘trading ahead’ case occurred in 2009 when the Securities and Exchange Commission ruled against E*Trade Capital Markets LLC. They were found guilty of repeatedly trading ahead of customer orders and generating more than $28 million in ill-gotten gains. While this may sound small, the losses suffered by many investors are substantial.
Insider trading
It is not uncommon for stockbrokers and other brokerage employees to engage in illegal insider trading. One recent case involved a former Morgan Stanley employee who obtained nonpublic information and passed it on to a childhood friend, making him a $750,000 illegal profit. While this case was extremely unusual, it illustrates the importance of investigating stock broker fraud and insider trading. In addition to investigating insider trading, FINRA also requires brokerages to establish a supervisory system, and the firm should flag employees suspected of illegal activity.
The first step to preventing insider trading is understanding what constitutes “insider trading.” By definition, insider trading involves buying or selling a security in violation of fiduciary duty. Insiders typically are corporate officers, directors, or major shareholders. However, they can also be employees who have access to confidential information about a company. The trading of a security by an insider that does not belong to the public is illegal. While corporate officers and directors have fiduciary duties to their shareholders, insiders often put their own interests first.
