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Post date: February 16 2016

A.G. Schneiderman Announces Conviction And Sentencing Of Albany Broker For Running Decade-Long, $5 Million Ponzi Scheme

Frederick E. Monroe, Jr., Former Senior Vice President Of Capital Financial Planning, LLC, Sentenced To 5 1/3-16 Years In Prison For Stealing Over $5 Million From Investors

Schneiderman: From The Biggest Financial Institutions To Individual Investment Brokers, My Office Will Continue To Aggressively Investigate And Prosecute Complex Financial Crimes And Securities Fraud

ALBANY – Attorney General Eric T. Schneiderman today announced the conviction and sentencing of Frederick E. Monroe, Jr., 59, of Queensbury, New York, for stealing over $5 million from investors by fraudulently soliciting them to reinvest their retirement monies.  In December 2015, Monroe pleaded guilty in Albany County Court to Scheme to Defraud, Grand Larceny, Money Laundering and Securities Fraud for luring clients with whom he had established relationships with 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. Monroe was sentenced today to 5 1/3-16 years in prison.

“When New Yorkers hire financial professionals to invest their hard-earned retirement savings, they deserve honest and transparent services,” said Attorney General Schneiderman. “From the biggest financial institutions to individual investment brokers, my office will continue to aggressively investigate and prosecute complex financial crimes and securities fraud.”

The Attorney General’s investigation uncovered that Monroe had orchestrated an ongoing Ponzi scheme since 2002, which concluded with Monroe’s arrest by the Attorney General’s Office in June 2015.  At the time of his arrest, Monroe worked as a Senior Vice President at Capital Financial Planning, LLC (“CFP”) in Guilderland, New York, which offers securities and investment advisory services through Voya Finanical Advisors, Inc. The investigation, however, revealed that Monroe had been stealing from his clients since he had worked at Northwestern Mutual Investment Services in Latham, New York.  During the thirteen years that Monroe stole money from his clients, he diverted funds for, among other things, airline tickets, timeshares, credit card, car and mortgage payments, and to pay back prior investors in order to perpetuate his scheme. 

Monroe had 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.”   The Attorney General’s investigation revealed that Monroe solicited investors through referrals from other clients that he was stealing from, and even targeted members of his own family. 

After gaining the trust of his clients, some of whom he had known for over 30 years, Monroe instructed them to invest by giving him cash or writing checks to him personally, which he deposited them into his personal operating account. 

Monroe admitted that in furtherance of his scheme, he 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 tell them that their money was being invested in bonds. Instead of investing as promised, Monroe diverted investor monies for his own personal use, as well as the withdrawal and transferring of funds from his operating account to other personal accounts in Monroe’s name. 

On December 21, 2015, Monroe pleaded guilty in Albany County Court to one count of Money Laundering in the First Degree (a Class B Felony), one count of Grand Larceny in the Second Degree (a Class C felony), one count 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). 

At today’s sentencing, the prosecutor discussed the details of the OAG forensic audit, which revealed how Monroe had spent his clients’ money; the following are among his largest expenses:

  • In excess of $785,000 on credit card, mortgage and other bank payments;
  • In excess of $650,000 in cash and other transfers accessible by Monroe;
  • In excess of $275,000 on retail purchases and home expenses;
  • In excess of $235,000 on automobiles and related expenses;
  • In excess of $230,000 on business expenditures, marketing, insurance and consultants;
  • In excess of $215,000 on timeshares, recreational and travel expenses; and,
  • In excess of $155,000 on groceries, gasoline, restaurants, alcohol and cigars.

Today, in Albany County Court, the Honorable Peter A. Lynch sentenced Monroe to 5 1/3-16 years in prison.   Monroe also signed confessions of judgment in favor of all his victims in excess of $3 million.

This conviction is the latest in a series of securities fraud prosecutions brought by the Attorney General’s Criminal Enforcement and Financial Crimes Bureau.   On February 2, 2016, the Bureau convicted William Vogt on felony charges in both Ulster County and New York County for posing as an internationally renowned fashion designer named “Bill Bolland” to lure his victims into making more than $400,000 in investments; Vogt will be sentenced to up to 12 years in prison. In December 2015, following a two-week jury trial, the Bureau convicted Moazzam Ifzal Malik, a.k.a. Mark Malik, on a 28-count indictment for stealing over $800,000 from investors by fraudulently soliciting them to invest in his fake hedge funds; Malik was sentenced to 5 to 15 years in prison.   In January 2015, the Bureau convicted 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.  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. In March 2014, the Bureau arrested Wing K. Lim, owner of Wall Street Investment, LP, on a 31-count indictment for allegedly operating a $4.3 million securities fraud scheme; the case is scheduled for trial later this year.

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 Chief Stephanie Swenton. 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, Investigator Samuel Scotellaro and Deputy Chief Antoine Karam. Forensic accounting was performed by Associate Forensic Auditors Jason Blair and Meaghan Scovello. The Investigations Bureau is led by Chief Dominick Zarrella.  The Forensic Audit Section is led by Chief Auditor Edward J. Keegan.