Wednesday, June 10, 2009
The SEC settled charges against Matthew D. Weitzman, an investment adviser who lives in Armonk, N.Y., for allegedly orchestrating a scheme in which he stole more than $6 million in investor funds for his own personal use, in some instances victimizing clients who were terminally ill or mentally impaired. According to the SEC's complaint, Weitzman is the co-founder and a principal of AFW Wealth Advisors, the business name for AFW Asset Management, Inc., a registered investment adviser located in Purchase, N.Y., with an office in Natick, Mass. Weitzman also served as AFW's compliance officer.
The SEC alleges that Weitzman sold securities in clients' brokerage accounts and illegally funneled their money to a bank account that he secretly controlled. While Weitzman spent the money on a multi-million dollar home, cars, and other luxury items, he provided false account statements to clients often showing inflated account balances and securities holdings. Weitzman also submitted to a broker-dealer phony letters from clients that purported to authorize the money transfers. When clients questioned Weitzman about the transfers they did not authorize, he misrepresented that he was withdrawing their funds to make legitimate investments.
The SEC's complaint charges Weitzman with violating Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and with aiding and abetting violations of Section 204 and Rules 204-2(a)-3 and 204-2(a)(7) also of the Advisers Act. The complaint seeks a permanent injunction, disgorgement of ill-gotten gains plus prejudgment interest, financial penalties, an asset freeze, a sworn accounting, an order prohibiting the destruction of documents, and a requirement that Weitzman notify the SEC and obtain approval of the court before he files for bankruptcy protection.
Weitzman agreed to settle the SEC's claims and, without admitting or denying the allegations, consented to the entry of a judgment that will grant the SEC the full relief that it seeks, but will defer the determination of the financial amounts of the settlement until a later date. The agreement to resolve the SEC's action is subject to approval by the court.