Can you imagine placing your hard-earned savings in the hands of someone you trusted, only to realize later that you’ve been duped? Picture being a retiree, disabled, or simply trying to grow your investment, then waking up to the horrifying fact that the financial advisor you thought was watching your back was actually siphoning your savings for personal gain.
This isn’t a hypothetical scenario. This tale of deceit unfolded not too long ago when the Securities and Exchange Commission leveled charges against Joseph Todd, a former financial advisor of Centaurus Financial. In an elaborate scheme, he allegedly defrauded at least 20 brokerage clients, some of whom were elderly and disabled, stripping them of no less than $3 million.
The complaint filed in the U.S. District Court for the Middle District of Florida paints a detailed picture of Todd’s transgressions. How did he pull off such a scam? Simple. He told his clients to make checks payable directly to him or his controlled entities, promising that the funds would be wisely invested in securities.
Yet, where did that money actually go? Todd allegedly funneled these funds into personal luxuries: boating, hunting, casinos, adult entertainment, and real estate, according to the SEC. How did he manage to deceive his clients about their dwindling investments? He fabricated account statements and portfolio holdings, creating the illusion of a flourishing investment portfolio.
The charges are serious. Todd and his affiliated companies, Todd Financial Services, and TFS Insurance Services, are accused of violating multiple financial regulations, including Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 of the SEC, and the antifraud provisions of the Securities Act of 1933.
Todd and his companies, while not admitting or denying the SEC’s allegations, have consented to injunctive relief, an officer-and-director bar against Todd, and agreed to pay disgorgement, prejudgment interest, and civil penalties, the quantum of which is yet to be determined by the court.
Tracing Todd’s footprints, he kick-started his career at Raymond James in 1988. Before joining Centaurus in 2016, he had stints at IFG Network Securities, Investors Capital Corp., Invest Financial Corp., and Edward Jones. His tenure at Centaurus ended in July 2022 after an internal investigation into alleged receipt and misappropriation of client funds.
Furthermore, Todd faces an indefinite suspension by the Financial Industry Regulatory Authority due to non-compliance with an arbitration award or settlement agreement. His record has been tarnished by three pending customer disputes with requested damages exceeding $350,000.
Is it not reasonable to expect Centaurus to respond appropriately after these allegations have been brought to the SEC’s attention? One could only hope that Florida’s state criminal prosecutors will follow suit in the near future.
As of the time of publication, Centaurus had not responded to requests for comments on the allegations or the ongoing lawsuits against the company. One can’t help but wonder: will justice prevail for those who were caught in this web of deceit? We eagerly await their response.
