Ex-Morgan Stanley adviser ran Ponzi scheme, triggered $2M in investor losses: SEC

A former Morgan Stanley adviser ran a Ponzi scheme and bilked his purchasers out of lots of of 1000’s of {{dollars}} — money that was used to repay earlier victims and cover non-public payments akin to Tesla automotive funds, in line with the feds.

The SEC acknowledged the adviser — acknowledged as Shawn E. Good of Wilmington, North Carolina — targeted “novice consumers” inside the scheme, along with retirees and a single mother with youthful children and restricted income. He allegedly happy the purchasers to modify money to his non-public checking account.

Good purportedly swindled his purchasers out of as a minimum $4.8 million in funds all through the scheme, which he ran from late 2012 through as a minimum February 2022 and led to better than $2 million in losses.

In a criticism filed in federal courtroom, the SEC alleged that Good used as a minimum $13,000 in stolen money to make funds in the direction of his Tesla Model 3, $23,000 in the direction of his Alfa Romeo Stelvio and roughly $800,000 in the direction of glorious financial institution card funds.

Good despatched some $110,000 of the ill-gotten money out in Venmo funds to others with eyebrow-raising matter strains — which included “because of youre enticing,” “Lodge for Future,” “Nailz” and “procuring,” in line with the criticism.

The SEC alleges {{that a}} former Morgan Stanley adviser bilked purchasers out of $4.8 million.
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“Good instructed purchasers that he would use these funds to place cash into land enchancment initiatives and tax-free North Carolina state or municipal bonds on their behalf,” the SEC’s criticism says.

“Good moreover instructed the purchasers that these investments have been ‘low-risk’ and would pay returns of between 6% and 10% over three-month or six-month phrases, though Good certainly not provided purchasers with prospectuses or written agreements to substantiate these promised returns and completely different representations,” the criticism gives.

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Bloomberg was first to report on the SEC grievance.

The SEC well-known that one shopper, acknowledged as “Investor 5,” was a “divorced mother of two youthful children who obtained roughly $1.9 million in her divorce settlement in early 2020.”

“Investor 5 significantly instructed Good that her settlement was all of the money that she had and might be her main provide of income with which to take care of herself and her two youthful children,” the submitting acknowledged.

Morgan Stanley fired Good in February 2022 for refusing to cooperate with an inside probe into his alleged misdeeds, in line with the SEC.

A Morgan Stanley spokesperson confirmed Good is “not employed” by the monetary establishment. 

“The conduct alleged inside the criticism is plainly unacceptable,” the spokesperson acknowledged in an announcement. “We’re for the time being reviewing the matter, which impacts a small number of purchasers, and are cooperating with the SEC and completely different authorities authorities.”

The SEC is on the lookout for an injunction in the direction of Good along with the “disgorgement of ill-gotten useful properties,” amongst completely different approved cures.