A former Wells Fargo advisor was permanently barred from the brokerage industry last week for running what appears to be a Ponzi scheme, according to a story by SFGate, the website sister-site of the San Francisco Chronicle.
Michael Frew, a longtime Bay Area broker, allegedly solicited millions of dollars from friends, family and customers that he said he would invest with a real estate developer to rehabilitate properties in areas hit by natural disasters. But such investments were likely never made, said San Francisco attorney Cary Lapidus.
According to SFGate, Frew promised the people he duped high interest payments ranging from 10% to 14% annually, with some receiving such payments for extended periods of time. When the payments stopped, however, and investors were unable to contact Frew, the illicit scheme fell apart, according to the SFGate account, which Lapidus confirmed to be accurate.
Suzanne Geer, a 70-year-old victim of the scheme, said she began investing with Frew in 1998 after her husband died. For years, she received regular payments that came in like clockwork but in April her 14% check didnt come in, according to SFGate. Over the years, Geer invested about $370,000 with Frew.
So far, some 20 to 30 investors have contacted Lapidus with their complaints. Lapidus estimates that Frew solicited money from customers and others totaling between $1 million and $10 million based on what hes seen so far, Lapidus told Bank Investment Consultant.
Both FINRA and Wells Fargo declined to provide details of the investigation beyond what was in the settlement letter that Frew signed with FINRA last week. The letter, which banned him from the industry, provided scant information about Frews actual misdeeds. I cant comment on the record on that at all Im afraid. Its an ongoing investigation, said Tony Mattera, a spokesman for Wells Fargo Advisors.
FINRA launched its investigation in February, one month after Frew resigned from Wells Fargo Advisors following the firms investigation into whether he had received funds from customers. According to the settlement letter, FINRA began investigating whether Frew had accepted customer loans or converted customer funds for personal use.
Frew refused to cooperate with FINRAs investigation, providing the regulator with a partial but substantially incomplete and misleading response to a request for information, according to FINRA. He also refused to appear for testimony.
Frew could not be reached for comment. In the settlement letter, he neither admitted nor denied the charges but consented to an entry of FINRAs findings.