Publicly available records provided by the Securities and Exchange Commission (SEC) and the New Jersey Bureau of Securities accessed on August 16, 2018 indicate that former New Jersey-based investment adviser Richard Belott, and his former employer, Financial Planning Advisors, have been sanctioned by the Bureau in connection to various allegations of fraud.
According to the Bureau’s findings, the allegations against Mr. Belott include selling unregistered securities, acting as an agent without registration, making untrue statements of material fact and/or omitting material facts, engaging in “an act, practice of course of business which would operate as a fraud or deceit upon any person in connection with the offer, sale or purchase of securities,” doing the same upon advisory clients, engaging in dishonest or unethical practices in the advisory business, failing to maintain written investment advisory contract, failing to make and keep required books and records, and making false and misleading statements to investigators.
The Bureau’s complaint states specifically that from about 2008 until 2015, Mr. Belott and his employing firm, Financial Planning Advisors, made fraudulent sales of “at least 6.1 million of unregistered securities to at least eight investors,” including customers who were elderly. The products in question were at least 24 promissory notes that were represented as issued by local diners and a developer. “However,” according to the complaint, “instead of receiving promissory notes from the diners and developer, investors received personal promissory notes from the owners of the diners and the developer, who had undisclosed business relationships with Belott, and in one instance, from Belott himself.”
He also allegedly deposited investors’ funds directly into Financial Planning Advisors’ bank accounts—rather than sending them to the note issuers—and used “at least $1.55 million of the funds for his personal benefit,” for instance repaying loans, paying his daughter’s tuition, making mortgage payments, and paying charges on his personal credit card, including for vacations. On three instances, according to the Bureau’s complaint, e also used these funds to repay prior investors in the promissory notes. The complaint also alleges that Mr. Belott and Financial Planning Advisors “failed to maintain required books and records,” provided the Bureau with altered documents, and made false statements to investigators while they were under oath, all in violation of securities laws and regulations.
In connection with these findings, Financial Planning Advisors’ investment adviser registration was revoked; Mr. Belott’s investment adviser registration was revoked; and both Mr. Belott and Financial Planning Advisors were “jointly and severally assessed and liable to pay civil monetary penalties in the amount of $500,000,” per New Jersey law.