Investment Advisor Gets 3-9 Year Prison Sentence For $2 Million Fraud
Attorney General Spitzer announced today that a Buffalo investment advisor who stole the life savings of his clients -- many of them elderly and widowed -- was sentenced to three-to-nine years in prison for his crime. Spitzer also announced that all of the victims are expected to get back the money that was stolen from them.
Robert Young, 55, was sentenced this morning by Erie County Court Judge Sheila DiTullio for stealing over $2 million from 14 clients, friends, and family members between 1988-97. The victims' losses ranged from $10,000 to $300,000.
Young used part of the money to buy Mount St. Mary's High School in Tonawanda. Young also bought the property surrounding the school and had plans to develop it. The Attorney General's two year investigation also revealed that Young used large amounts of his clients' money for himself.
"This was a horrible crime," said Spitzer. "Young preyed upon those who trusted him and stole their life savings -- the death benefits of a spouse, retirement accounts, money set aside for children and grandchildren -- it was all fair game to him.
"Young is getting exactly what he deserves - prison time, and I'm delighted to say that the victims will be getting what they deserve - restitution of the money that Young stole from them. I'm delighted that we're able to give the victims the good news right before the holidays."
Young, while working at GR Phelps, promised investors a 9% return on their money, claiming the investment was "safe" and "guaranteed." In fact, Spitzer's investigation revealed that the deal was extremely risky and speculative. In addition, Young took money from some clients without their knowledge or consent by forging their signatures.
Of the $2 million in restitution, $1.5 million is coming from GR Phelps, the assets of which were acquired by MML Investors Services, Inc. ("MMLISI"), a MassMutual Company in 1996. Young was fired by GR Phelps in September, 1995 after some 18 years with the company.
"I want to commend MMLISI for stepping up to the plate and doing the right thing here," said Spitzer. "Although Young was never employed by MMLISI, the company was fully cooperative during our investigation and deserves a great deal of credit for working with us on behalf of the victims."
The remaining $500,000 in restitution will come from assets of Young's former corporation. The victims should receive their money within the next few weeks.
The Attorney General noted that other than government bonds, there is no such thing as a "guaranteed" or "risk free" investment. He advised anyone who is approached with such an offer to immediately contact the manager of the investment firm, bank or insurance company whose employee is selling the investment. The public can also contact the Attorney General's office or the Securities and Exchange Commission.
Spitzer also thanked the Securities and Exchange Commission for its help during the investigation. Joining Spitzer at the news conference was the S.E.C.'s Assistant Regional Director, Barry W. Rashkover.
Taking part in the news conference were a number of Young's victims:
The case was handled by Assistant Attorneys General Diane LaVallee and Mary Catherine Baumgarten of the Buffalo Regional Office under the supervision of the chief of the Investor Protection Bureau, Eric Dinallo, and the chief of the Criminal Prosecutions Bureau, Janet Cohn.
- Roslyn Bindeman of Buffalo who lost $50,000 she had received from her husband's death benefit;
- Elizabeth Schmitt of Amherst who lost $50,000;
- Betsy Bandalian and Karl Wittman, whose 87 year old father Frederick of Cheektowaga lost $245,000;
- John Heine of East Amherst who lost $76,000.