10 years after firing indicted ex-rep, Ameriprise settles arbitration case
Their financial advisor allegedly defrauded them out of more than $14 million. Now, an ex-Ameriprise representative's former clients are running out of methods to pursue restitution for their losses.
Paul Ricky Mata’s case shows how challenging and lengthy recovering damages can be when an alleged scheme spans multiple affiliations, RIA entities and funds. An SEC-appointed receiver has paid out $1.6 million — only about 12% — of 94 clients’ total requested claims.
Mata's alleged scam involving unregistered real estate funds started in 2008, when he was still with the firm, and lasted until 2015. Another Ameriprise advisor, Brian Jackson, bought Mata's book after his termination in 2009.
He was only "a bystander who had little control over a situation not of his making," according to a FINRA arbitrator's ruling. Ameriprise agreed to pay $100,000 to settle claims by three of Mata’s ex-clients prior to the June 3 decision to expunge Jackson’s record, BrokerCheck shows. Days later, a federal grand jury indicted Mata, 56, on charges of mail and wire fraud.
“Exactly when and what Ameriprise knew about [Mata’s] activities is murky,” Arbitrator Elliott Finkel wrote in the detailed award document, adding that the firm “obviously had some knowledge about [Mata’s] nefarious activities” prior to his March 2009 termination.
Ameriprise approved the agreement struck by Jackson and Mata to buy the book about a week after the firing, the award document states. The firm notified clients that it had fired Mata for violating company policies — but he sent his own letter denying he had done anything wrong.
One now-deceased client had invested in a fund controlled by Mata, but only after Mata launched an RIA with no BD affiliation called Logos Wealth Advisors. Finkel also found no evidence Jackson knew the other two clients had liquidated their annuity holdings to invest in the fund.
Allegations against Jackson of failure to supervise, breach of fiduciary duty and other claims are false because he wasn’t involved in Mata’s conduct, according to the decision. The clients didn’t contest the expungement after the March settlement with the firm.
Clients have received little restitution despite an order for Mata and affiliates to pay $11.7 million in connection with the SEC’s civil case. Despite the termination and several regulatory cases before 2015, Mata managed to bilk retirees who thought of him as family, according to Philip Vujanov, an associate attorney with ChapmanAlbin who represented them in the arbitration.
“Brokers go to the RIA side after they get dinged for things,” he says. “For a lot of these clients, these were their life savings, everything they worked for. He was like family to them.”
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The public defender representing Mata in the federal criminal case out of the Central District of California didn’t respond to requests for comment. Jackson — who has no other regulatory disclosures besides the one approved for removal — also didn’t respond to inquiries.
Jackson was “unwittingly caught in the wake of [Mata’s] independently orchestrated conduct and allegations against Jackson are but a thinly supported afterthought, warranting expungement,” according to the decision.
The firm is pleased by the arbitration decision, and Mata sold the investments to the three clients when he was no longer affiliated with the firm, Ameriprise spokeswoman Kathleen McClung said in an email. The company also filed a Form U5 amendment with FINRA in 2009.
In 2011, Mata accepted a suspension from FINRA after the regulator accused him of selling private securities transactions without company approval, BrokerCheck shows. Two state regulators and the CFP Board also sanctioned him prior to the SEC’s civil case in 2015.
He didn’t disclose his disciplinary history to victims while reeling them in through investment seminars called “Finances God’s Way” and “Indestructible Wealth,” the SEC says. Mata, another barred ex-advisor and a third business associate settled the SEC case in 2016.
The appointed receiver ultimately uncovered $2.1 million in cash for the restitution, according to the final distribution report filed in September 2017. After deducting $460,000 for administrative and professional fees, the clients who requested $14 million received a little more than a dime for every $1 they invested.
Mata had guaranteed annual returns of 5% to 10% through distressed properties and other risky real estate plays under a fund called Secured Capital Investments, according to the criminal case. In reality, he was using their money to provide outlays to other clients, invest in other types of businesses and pay off personal expenses like a down payment on a home, investigators say.
In addition to mail fraud and wire fraud, the 17-count indictment also carries charges of making false statements in a bankruptcy proceeding. In a filing for bankruptcy protection, Mata failed to state the business names of his RIA and fund affiliates and list two cars belonging to his estate, the document shows.
An FBI agent arrested Mata in connection with the charges on June 12, after which he surrendered his passport and paid a $50,000 bond for his release, court records show. The charges would result in a maximum sentence of 295 years if he’s convicted on all 17 counts.
In addition to the settlement of the three clients’ arbitration claims, ChapmanAlbin has pursued two other cases involving former clients of Mata, according to Vujanov. Clients received no award in one case and a settlement in the other, he notes, declining to disclose the amount.
“It’s the financial loss as well as the abused trust that’s been haunting them,” Vujanov says. “They’ll never be made whole, and they’ve been dealing with this for 10 years.”