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Post date: June 10 2015

A.G. Schneiderman Announces Arrest Of Albany Broker For Allegedly Running Ponzi Scheme Of More Than $1 Million

Frederick E. Monroe, Jr., Senior Vice President Of Capital Financial Planning, LLC, Allegedly Solicited Over A Dozen Investors And Diverted Their Money For Personal Use

If Convicted, Defendant Faces Up To 25 Years In Prison

ALBANY – Attorney General Eric T. Schneiderman today announced the arrest of Frederick E. Monroe, Jr., 59, of Queensbury, New York, charging him with stealing over $1 million from investors by fraudulently soliciting them to reinvest their retirement monies. Monroe is accused of luring clients with whom he had established relationships over his 20-year career as a financial planner, and then diverting their monies for his own personal use, as well as to pay back earlier investors he had defrauded. If convicted, the defendant faces up to 25 years in prison. Monroe was arraigned before the Honorable Judge Denise Randall in Guilderland Town Court where he pleaded not guilty. He is currently being held on $300,000 cash or bond bail. 

“New Yorkers should be able to trust that their investments, whether made with individual brokers or major financial institutions, are being managed honestly and legally,” said Attorney General Schneiderman. “My office is committed to aggressively investigating and prosecuting complex financial crimes and securities fraud. This case shows that anyone who attempts to defraud investors in this state will have to answer for their alleged misconduct.”

While the current charges pertain to three victims, according to statements made by the prosecutor at arraignment, the Attorney General’s investigation to date has identified at least a dozen individuals who Monroe allegedly defrauded. Prosecutors allege that based on Monroe’s false representations, just three of these investors gave over $1.26 million to Monroe, which Monroe then diverted for his personal use and to perpetuate his scheme.

Also according to the Attorney General’s felony complaint and statements made by the prosecutor at arraignment, Monroe instructed investors write checks to him personally and then deposited them into his personal Operating Account.  Monroe then allegedly used new investor monies to pay older investors and to maintain a lavish lifestyle.   Monroe advertised his services on the Capital Financial Planning, LLC website to “clients who have amassed a significant level of assets and seek to take advantage of advance advisory programs.”

In furtherance of his fraudulent scheme, Monroe allegedly created false financial statements that he gave to clients when they inquired as to the status of their investments. Monroe, when asked by clients, would allegedly tell them that their money was being invested in bonds. Instead of investing as promised, Monroe allegedly diverted investor monies for his own personal use, including for hotels, airline tickets, mortgage payments and credit card payments, as well as transferring funds from his Operating Account to other personal accounts in Monroe’s name.

The Attorney General’s complaint charges Monroe with fraudulently soliciting investments from three investors between 2008 and 2015. The defendant is charged with one count of Money Laundering in the First Degree (a Class B Felony), three counts of Grand Larceny in the Second Degree (a Class C felony), four counts of Securities Fraud under the Martin Act (a Class E felony), and one count of Scheme to Defraud in the First Degree (a Class E felony).

Monroe was arraigned today on the felony complaint before the Honorable Judge Denise Randall in Guilderland Town Court. The Attorney General’s investigation of Monroe continues.

The charges against the defendant are allegations and he is presumed innocent until proven guilty in a court of law.

This arrest is the latest in a series of securities fraud prosecutions brought by the Attorney General’s Criminal Enforcement and Financial Crimes Bureau. In February  2015, the Bureau charged New Jersey broker Khawaja Saud Masud for stealing over $1 million from a retired pediatrician and his wife by fraudulently soliciting investments in his purported hedge fund, RKS Capital, LP; just two weeks later he pleaded guilty.  Also in February 2015, the Bureau arrested Moazzam Ifzal Malik on a 28-count indictment, for fraudulently soliciting investments into his purported hedge funds, including Seven Sages Capital, L.P. and Wolf Hedge LLC.  In March 2014, the Bureau arrested Wing K. Lim, owner of Wall Street Investment, LP, on a 31-count indictment for operating a $4.3 million securities fraud scheme.  In January 2015, the Bureau charged William Vogt on an 18-count indictment for posing as an internationally renowned fashion designer named “Bill Bolland” to lure his victim into making more than $350,000 in investments.  In November 2014, the Bureau convicted Robert H. Van Zandt on a 33-count indictment for operating a $4.8 million Ponzi scheme; Van Zandt was sentenced to 3 2/3 to 11 years in prison.

The criminal case is being handled by Assistant Attorney General Philip V. Apruzzese of the Criminal Enforcement and Financial Crimes Bureau. The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau Chiefs Stephanie Swenton and Meryl Lutsky. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

The Attorney General’s investigation was conducted by Investigator Mitchell Paurowski and Deputy Chief Antoine Karam. Forensic accounting was performed by Jason Blair, Associate Forensic Auditor. The Investigations Bureau is led by Chief Dominick Zarrella.  The Forensic Audit Section is led by Chief Auditor Edward J. Keegan.