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Investment Advisor Defrauds Clients Out Of Retirement Funds

Apparently an Illinois investment advisor, Steven Salutric, engaged in an investment fraud that swindled the retirement savings of 10 elderly clients to lose more than $4.26 million.

Salutric was charged with one count wire fraud in a criminal information filed in late December of 2011. Apparently Salutric diverted clients’ funds to his personal business associates and to entities in which he had a financial interest, including restaurants, a movie production company, car dealerships, and real estate development projects, while using additional customer funds to make Ponzi-type payments to other clients.

Salutric was a founding principal of the former company, Results One Financial, which was a registered investment advisory firm with more than 1,000 clients and around $160 million in assets under management. Salutric managed the funds of approximately 100 clients, mostly individuals and small businesses, and allegedly cheated 10% of his clients out of their retirement savings.

According to the charges, Salutric schemed to defraud clients of Results One between December 2002 and January 2010 by fraudulently obtaining their funds that were held in customer accounts at Charles Schwab & Co, Inc., which served as the custodian of client assets. Salutric had discretionary authority to trade in the clients’ accounts, typically involving the relatively low-risk purchase and sale of mutual fund shares. Instead, Salutric fraudulently withdrew clients’ funds without their knowledge or permission, and he fraudulently placed clients’ money in high-risk alternative investments without their knowledge or permission, the charges allege.

Salutric allegedly fraudulently obtained more than $3 million from clients by preparing, forging clients’ signatures on, and faxing documents that falsely represented to Schwab that the clients wished to transfer funds from their Schwab accounts to bank accounts held by Salutric’s personal business associates and entities in which he had a financial interest. Salutric allegedly used at least a portion of the clients’ funds to make Ponzi-type deposits to other clients’ accounts to conceal and prolong the scheme.

In one instance, Salutric allegedly fraudulently transferred approximately $1 million from a single client to himself and various entities, including restaurants, a movie production company, car dealerships, and real estate development projects, in which he had a financial interest.

In other instances, Salutric allegedly lulled his clients by making false assurances, including telling one victim that his funds were invested in a union pension plan yielding a 15 percent return, telling another that his funds were invested in AT&T bonds providing an eight percent return, and telling yet another that his funds were placed in a certificate of deposit, when he knew that he had diverted funds from each victim for his personal benefit.

As a result of the scheme, about 10 clients suffered losses totaling at least $4,261,818, the charges allege – Source.


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