SEC Alleges Financial Advisor’s Elder Financial Abuse Misappropriated $3 Million

In a recent regulatory action, the Securities and Exchange Commission alleged that a financial advisor stole millions from elderly clients while promising that he would help them earn excellent returns on their investments. The SEC filed a civil complaint against Joseph Todd and his entities, Todd Financial Services and TFS Insurance Services, alleging that he misappropriated approximately $3 million from 20 of his customers, most of whom were senior citizens, retirees, or individuals with disabilities. This case demonstrates the brazenness with which certain financial advisors allegedly commit elder financial abuse.

How Did the Alleged Elder Financial Abuse Work?

Joseph Todd indicated that he would invest his client’s money in legitimate investments, such as Fund A, a registered closed-end fund that invests in collateralized loan obligations. He also allegedly told customers that he would invest in securities that the SEC alleges were fictional, such as the CRTFS Mortgage Fund. He allegedly never purchased any investments with his investor’s money, as he had indicated he would. The SEC also alleges that Joseph Todd made Ponzi-like payments, using funds from new investors to pay earlier investors, representing that the fraudulently obtained funds were the proceeds from an investment.

The SEC alleges that he told customers their investments would earn a minimum 5% return and that the principal investment would never lose money. The Complaint alleges that in total, customers wrote checks to TFS totaling $2.5 million. Customers also allegedly wrote checks directly to Joseph Todd for approximately $15,000 and to TFS Insurance for at least $526,654. This alleged activity dates back to August of 2016.

Since 2019, the SEC alleges that Joseph Todd spent more than $450,000 on boats, over $230,000 on a luxury condo in Mexico Beach, over $65,600 on hunting equipment, and more than $275,000 on tractors and farm equipment. He also allegedly spent more than $11,000 at casinos and adult entertainment venues. Additionally, Joseph Todd allegedly wrote $568,000 in checks to himself. The SEC has ordered Joseph Todd to return the money.

According to the complaint, “These customers did not question Todd about his instructions because they trusted him, understood he was a licensed and registered investment professional, and believed he was acting in his capacity as an investment professional and would be purchasing legitimate securities on their behalf.” Todd allegedly went to lengths to make his fraudulent scheme appear legitimate by creating the impression that he was associated with Centaurus Financial. For instance, his website claimed: “Securities and Advisory services offered through Centaurus Financial, Inc.”

Who is Joseph Michael Todd?

According to his BrokerCheck record, Joseph Todd first registered as a broker with FINRA in 1988. He most recently registered with Centaurus Financial in Crystal River, Florida. Centaurus Financial fired Joseph Todd on July 21, 2022. This followed their investigation into his activity outside of the firm. Centaurus alleged in its employment termination disclosure that Joseph Todd had not cooperated with the investigation.

In addition to the employment termination and regulatory action, Joseph Todd has eight investor disputes on his record, dating back to 2001.  

Elder Financial Abuse and Securities Regulators

The Securities and Exchange Commission and Financial Industry Regulatory Authority (FINRA) regulate the securities industry. SEC cases are civil, not criminal, cases. It is not yet clear if Joseph Todd will face criminal charges for elder abuse.

Regulators and lawmakers have rules in place designed to protect senior investors from elder financial abuse.

• The Senior Safe Act provides immunity for any brokers or financial advisers who report suspected elder financial abuse. It does not, however, require financial professionals to report suspected abuse. Each state makes its own rules regarding mandated reporting for elder financial abuse.                 
• FINRA Rule 2165 allows financial advisers and brokers who believe that elder financial abuse is taking place to halt the disbursement of funds.

Various securities laws prohibit the misappropriation of funds, misleading customers, and making Ponzi-like payments to investors.          

What Can I Do If I Suspect Elder Financial Abuse from a Financial Advisor?

If you suspect your financial advisor of theft or misappropriation, contact a securities attorney. You may also contact a securities attorney if you are a trustee or have power of attorney over the elderly person’s account. Investors often recover their losses through a process called FINRA arbitration, and an investment lawyer can guide you through the process.

• FINRA provides a hotline for seniors who want help reviewing their accounts: 844-574-3577
• Concerned parties can also report suspected elder financial abuse to Adult Protective Services.

Do not hesitate to contact the relevant authorities with your concerns. The elderly lose millions every year to elder financial abuse and need our help to prevent unnecessary losses.