SEC Catches Chad Burroughs

SEC Catches Up With Chad Burroughs CT Investment Adviser For Defrauding Retail Investors

The long arm of the Securities and Exchange Commission has finally caught up with Lester “Chad” W. Burroughs. The Connecticut Investment adviser is accused of running a Ponzi scheme that resulted in the misappropriation of close to $575,000 in investors’ funds.

The investment adviser operated Burroughs Investment Group in Torrington as part of the Ponzi like scheme. Similarly, he was often affiliated with the Lincoln Investment Planning LLC, which has since fired him amidst the ongoing SEC probe

Chad Burroughs Ponzi-Like Scheme

The Chad Burroughs is under investigation for allegedly selling fictitious financial products to unknowing investors. Likewise, he is accused of using investors’ money to pay other advisory clients in addition to embezzling some of the funds for his personal use.

The illegal scheme allegedly started in 2012 and ran until January 2019. Over the period, the investment adviser reportedly pooled investors’ money on the promise that he will invest the funds in guaranteed interest contracts. The promise of 4% to 7% annual returns was the catch that appears to have drawn investors into the scheme.

Immediate SEC investigations indicate that Burroughs never invested the clients’ money as promised or agreed. Upon misappropriating the investor’s money, the investment adviser reportedly prepared fake account statements as he sought to show the investors everything was well.

One of the clients duped is an elderly client who went on to invest close to $370,000 in four separate fictitious guaranteed interest contracts. Burroughs allegedly used the money to pay another client as well as make insurance policy statements for other clients.

The scheme was only uncovered when a relative of the elderly client started asking questions as to the kind of investments that Burroughs had made. It is alleged that Burroughs prepared false statements as he sought to buy some time and cover his tracks. The fake statements allegedly show that the elderly investor had four guaranteed interest contract with a well-known insurance company worth about $152,000.

Burroughs was caught by surprise when the relative asked for repayment of the invested capital as well as the interest. Given that Burroughs had already spent the money, he convinced other advisory clients to invest, as he sought to pool sufficient funds to pay back the elderly client.

SEC Charge

The advisory clients agreed and went on to invest close to $560,000 in the scheme to the relief of Burroughs. The $560,000 investment allowed Burroughs to pay back the elderly client $445,000. The payment covered the principle as well as the 4% annual interest accrued over the period.

However, it appears the SEC has finally caught up with Burroughs. The veteran investment adviser now faces criminal charges for violating antifraud provisions under Sections 206(1) and 206(2) of the Investment Advisers Act. The matter is complicated further by the fact that the investment adviser has already made sixteen disclosures, fourteen Customer disputes, and one regulatory allegation.

After being a registered broker since 1969, Burroughs faces a possible jail term or hefty fine given the criminal and civil charges at hand.  Brokers and brokerage firms are obliged by law to conduct their business while adhering to the highest standards or commercial honor. Likewise, they are required to maintain just and equitable principles of trade. Burroughs appears to have gone against all the set standards.

Any person who invested with Burroughs or the Burroughs Investment Group and suffered losses on purchasing the fictitious financial products can recover losses as part of the FINRA arbitration.

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