Imagine a spider spinning a web full of illusions and deceit to lure unsuspecting prey into its lair. When considering the charges against Joseph Michael, this is the image that comes into mind. “Mike” Todd, who is a resident in Panama City, Florida, along with his Todd Financial Services, LLC, (“TFS”TFS Insurance Services LLC, (“TFS Insurance”).
Todd used his position as an investment adviser representative and registered representative to defraud at least 20 customers of their brokerage accounts of $3 million. He presented a picture of prosperity and financial security, telling customers their money would be invested in securities. But was it the truth?
Sadly, no. Todd’s promise was as hollow as an old tree trunk. Todd is accused of pocketing the money instead of investing it, and spending the money on extravagant personal indulgences such as real estate, boats, hunting, casinos, adult entertainment, etc. Todd’s scam was perpetrated on many seniors or disabled people.
You might wonder how he managed to maintain this charade. Forgery and falsification are the answer to this age-old tale. Todd presented forged portfolio holdings or account statements to defrauded clients, creating the illusion of investment that was as real as unicorn.
Todd, to cover his tracks even went as far as to make Ponzi-like payments, by using the funds of other customers to make regular deposits into this customer’s account from a TFS Bank account. He claimed that these payments were either interest or distributions from an investment. This claim was as tenuous as a house on cards.
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In its complaint, the SEC seeks to apply the full force and authority of the law against Todd and his companies. They accuse them of violating anti-fraud provisions in the Securities Act and Securities Exchange Act. The SEC seeks disgorgement and civil penalties as well as permanent injunctions based on conduct, permanent injunctions against Todd, and a permanent director-and-officer bar.
To get out of this mess, Todd, TFS and TFS Insurance agreed to injunctive remedies and an officer-and director bar for Todd. They also agreed to pay civil penalties, disgorgement and prejudgment interests. The Court will determine the amounts at a future date.
The SEC investigation continues, providing hope to those caught in Todd’s deceitful web. Daniel Hayes is the lead litigator, a knight-in-shining armor ready to fight in court for justice.
The SEC wishes to thank the Financial Industry Regulatory Authority for their assistance in this quest for Justice. We are reminded by this story of the need for vigilance, transparency and honesty in the financial world, which is a place where deceitful dragons and treachery lurk.
