The Financial Industry Regulatory Authority (FINRA) has barred broker Marc Duda of Fullerton, California for intentionally perpetrating a Ponzi scheme designed to defraud investors through the use of false promises and overt misrepresentations.
According to FINRA and unbeknownst to his employer firm at the time, Geneos Wealth Management, Inc., Duda devised his scheme in 2008, planning to defraud at least 10 investors—seven of them elderly—of approximately $2.5 million.
In this scheme, Duda falsely promised he would purchase securities on behalf of these investors, investment vehicles including certificates of deposit with banks, secured note funds and other lending investments.
However, according to FINRA, this was a lie—Duda did not invest any of the investors' funds in any investment vehicles as promised; instead, he used all of this money for personal expenses and business ventures, including the purchase and maintenance of an airplane, boat, car and motorcycle, mortgage payments, Las Vegas gambling debts and expenses and child care.
Duda additionally was found to have liquidated one investor's stocks, converting all proceeds from this sale for personal expenses, furthermore wiring $15,000 of these funds to a personal account.
Duda's actions were deliberate and fraudulent, as the Fullerton broker attempted to conceal his activities by using investors' funds to make payments to other investors who may have grown suspicious, in essence guaranteeing a Ponzi-like environment in that later investors' funds were generally used to pay off preceding investors.
When not enough new investors were left to finance the scheme, it began to unravel. Upon learning of this fraudulent activity, Geneos immediately terminated Duda's employment.
According to Duda's BrokerCheck, seven former customers presently have disputes pending against Duda, with alleged damages totaling nearly $5.95 million. This includes one civil litigation action pending in the Orange County, CA Superior Court system, with alleged damages totaling $1.3 million.
In March, Duda was sentenced to 6.5 years in federal prison for wire fraud related to his multi-million dollar fraudulent scheme.
If you have invested with Marc Duda or with any broker or firm who you suspect has perpetrated a fraudulent scheme, such as a Ponzi scheme, that has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.