NY financial adviser charged with embezzling over $1 million from client and potential clients
A former registered investment adviser and founder of a financial advisory firm in New York has been charged with fraud and money laundering.
An indictment was released Monday, Dec. 6, in federal court in Central Islip, charging Long Island, Suffolk County resident Jeffrey Slothower with wire fraud, investment adviser fraud and money laundering. money as part of a scheme to embezzle more than $1 million from current and potential customers.
Slothower was arrested earlier today at his home in Southampton.
“As alleged, Slothower executed a calculated scheme in which he repeatedly lied to his current and potential clients about putting their money in legitimate investments, when in reality he stole their money to fund his lavish lifestyle,” said Breon Peace, United States Attorney for the Eastern District of New York. “This office will vigorously investigate and prosecute corrupt financial advisers like the defendant who abuse the trust of their clients and violate the law to enrich themselves.”
Slothower was the founder and operator of Battery Private.
According to the indictment:
- While operating Battery Private, Slothower solicited business from a Californian couple whose money Slothower had managed at another financial services firm.
- Slothower promised the victims that he could beat any rate of return they received and do so without market risk.
- Victim 2 then signs an investment advisory contract with Battery Private. Slothower continued to solicit Victim 1’s business, and in 2017 he offered to invest Victim 1’s money in what Slothower described as homeowners association fee-backed bonds, which would yield to victim 1 a return of 8%. Based on these representations, Victim 1 agreed to invest money with Slothower through Battery Private.
- Slothower sent wiring instructions to Victim 1 for his investment and attached a document with additional statements about Victim 1’s alleged investment, claiming that Victim 1’s money would be held in “capital reserves” from Battery Private.
- Then, between January 25, 2017 and January 27, 2017, Victim 1 sent over $500,000 to Slothower at Battery Private to be invested in the alleged HOA bonds. However, this money was not invested in HOA bonds or held in “capital reserves,” as represented by Slothower. Instead, Slothower used the money to, among other things, wire money to himself, buy a fancy car, and pay the fees for a private golf club on Long Island. To continue the fraudulent scheme, Slothower then made payments to Victim 1 which were misrepresented as quarterly distributions of Victim 1’s investment.
- Later, Slothower sought additional funds and asked Victim 1 to find money to invest, including money from Victim 2 who was then a Battery Private client. Victim 2 learned about the HOA bond investment from Victim 1, including the fact that Victim 1 had received alleged quarterly returns from the investment.
- Victim 2 then agreed to invest in the same alleged HOA bonds, and in or around December 2017, Victim 2 sent over $500,000 to Battery Private’s Slothower to invest in the HOA bonds. However, like Victim 1, Victim 2’s money was not invested in HOA bonds or held in “capital reserves” as represented by Slothower. Instead, Slothower used the money to, among other things, pay personal credit card bills. To continue the fraudulent scheme, Slothower made payments to Victim 2 which were misrepresented as quarterly distributions of Victim 2’s investment
- In June 2018, Victim 1 made an additional investment of approximately $84,000 in so-called HOA bonds. Again, Slothower did not invest this money in HOA bonds or hold it as “capital reserves” as it previously represented. Instead, Slothower used Victim 1’s money to, among other things, make alleged quarterly payments to Victim 1 and Victim 2 which were falsely presented as their returns on investment and to pay the club of private Long Island golf course.
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