According to a joint statement of the acting U.S. attorney Nathaniel Mendell and Joseph Bonavolonta, a special agent with the Boston Division of the Federal Bureau of Investigations, a longtime financial adviser was arrested and charged with defrauding elderly clients and stealing pension assets. Michael J. Smith, 58, of Boston, was charged with three counts of bank fraud, mail fraud, and aggravated identity theft. Smith provided investment advice under the name Integrated Financial Services.
According to his broker-check profile, McGonigle spent 20 years of his 34-year career with SII Investments before joining LPL in early 2018. According to the indictment, he began unauthorized withdrawals from his clients’ pensions in July 2018 by posing as his client, calling pension funds, and forging their signatures on withdrawal forms and other documents. He stole more than $289,000 from five clients, all of whom were elderly or in poor physical or mental condition. He continued the scam for months after being suspended by Finra in November 2020 after failing to respond to its requests for information.
He faces up to 20 years in prison, three years under supervision, and a fine of up to $250,000 in connection with the charges of mail and wire transfer fraud. The charge of aggravated identity theft carries a mandatory consecutive sentence of two years, one year of supervision and release, and a $250,000 fine. The FBI issued an arrest warrant for McGonigles last Tuesday, and he appeared before Judge Donald L. Cabell the following day.
How Investors Can Protect Against Fraud
Despite increased regulations, there is an uptick in financial fraud, especially against seniors. The sad thing is that many times the losses could be prevented or minimized if they were caught in the beginning.
The first step any investor should do before investing any money is to check out the background of the financial advisors. This can be done by going to FINRA’s Broker Check website. Most brokers have a clean record and provide value. However, I personally stay away from financial advisors that have a lot of disclosures.
The second step is to get a second opinion on the investment and strategy. Many financial advisors offer a free consultation and will review your portfolio for free. There is nothing wrong with having a second pair of eyes look at something.
The third step to do if you are unsure is to consult an investment fraud lawyer. Most investment fraud attorneys offer a free consultation and will tell you if the advisor or products have red flags.
This goes without saying, but if an investment is “too good to be true,” then it probably is. Investments that are not publically traded and registered are often fraudulent or could have serious issues down the road for the investor.