According to recent information released by the securities industry watchdog, FINRA (Financial Industry Regulatory Authority), over his long 35 year career with major brokerage houses including Stifel and most recently Wells Fargo, former Certified Financial Planner John Gregory Schmidt formed close personal relationships with elderly and infirm clients in order to win their trust and steal their money.
Several Clients Had Alzheimer’s or Died During the Course of the Fraud
When Schmidt faced shortfalls in several of the accounts in his investment portfolio, he covered them by stealing more than $1M from seven clients. What did these clients have in common? They were among his oldest and wealthiest; some of them also apparently suffered from Alzheimer’s. Incredibly, Schmidt got away with his deception for almost 15 years, including three years at Stifel and his last eleven at Wells Fargo.
Over time, Schmidt’s “robbing Peter to pay Paul” turned into a kind of Ponzi Scheme in which he paid out clients who continued to make withdrawals on their dwindling money from other clients of his. Then he would out false account statements that included vastly inflated balances, misleading his clients into thinking they were still safe in making their withdrawals on principal.
Worst of all, Schmidt targeted elderly and infirm clients who could be most easily manipulated. In the FINRA complaint, some of these clients were described as suffering from dementia, and no less than five clients actually passed away during the course of the fraud.
Elderly Fraud and Financial Abuse Is a Growing Problem
As the Schmidt complaint shows in shocking detail, elder financial abuse and exploitation is a major problem within the industry; and a growing one. FINRA has released multiple warnings and has punished brokers who exploit elderly or sick clients — and their sponsoring brokerages — with huge fines in recent years. At the same time, the SEC has hit the streets in a series of public seminars to raise awareness about elder financial abuse. These regulatory bodies warn that as the wealthiest generation in American history retires and slides into senility, many brokers who have fallen on dire straits will be tempted to try to take some of that wealth for themselves - by any means necessary.