A barred broker with more than 50 disclosures on record — and facing six counts of fraud — was indicted on additional charges, according to federal prosecutors.

Anthony Diaz, 48, was charged with six counts of wire fraud in May 2016 for misleading clients about high-risk investments and is now facing five additional counts of mail and wire fraud in a superseding indictment filed this week, according to the U.S. Attorney’s Office for Pennsylvania.

The scheme defrauded clients of approximately $611,000, prosecutors say.

Beginning in 2006, Diaz misled clients into purchasing speculative and illiquid “alternative investment products,” that he said were guaranteed to earn certain rates of return, and would earn him substantial fees and commissions to which he was not entitled, prosecutors say.

The former broker had clients sign blank or partially completed documents then filled them out with false information concerning his clients’ net worth, income and investment experience, say prosecutors. In Pennsylvania, for example, clients are advised against devoting more than 10% of their net worth into such investments, say prosecutors.

(Bloomberg News)
(Bloomberg News)

The East Stroudsburg, Pennsylvania-based broker was terminated, or allowed to resign, from at least six firms over an almost 15-year career, for unauthorized trading, excessive customer complaints and supervisory issues, according to court documents. Diaz told his clients the separations were voluntarily and that the moves benefitted them, say prosecutors.

“Diaz placed client’s funds in alternative investment products regardless of each individual client’s age, net worth and income, and did so without inquiring as to a client’s risk tolerance, investment goals and objects, or in contravention of a client’s wishes,” according to the indictment.

The CFP Board suspended Diaz’s certification for three years for recommending unsuitable funds, altering dates on documents, using blank forms, among other infractions, according to court records. FINRA barred Diaz in May 2015, per FINRA BrokerCheck records.

Diaz maintained his innocence in one of his last comments regarding a FINRA customer dispute in 2014. “I vehemently assert my innocence to these allegations,” he wrote. “I believe these are the work of one or two individuals that are soliciting these complaints. All I ask for is an opportunity to clear my name.”

Diaz pleaded not guilty to the 2016 charges, according to court filings. Neither Diaz nor his attorney, Darren Gelber, responded to a request for comment.

FINRA ordered Diaz to pay back $4.3 million to 19 clients over the alleged unsuitable recommendations, according to an award issued by the regulator in January. The decision came after a settlement by San Diego-based First Allied Securities, one of Diaz’s former employers, in November, according to the regulator.

“We have been fighting Anthony Diaz for a very long time and we continue to look for assets that we might be able to seize,” says Adam Gana, managing partner of the law firm Gana LLP, who represented the claimants in the FINRA dispute.

Diaz worked for 11 firms over his career even after facing serious allegations, per Brokercheck. After being discharged from Edward Jones in 2002 for providing inaccurate information to a supervisor, Diaz was then hired by eight other firms, including Raymond James and SII Investments, per Brokercheck.

The maximum penalty is 30 years in jail for each mail and wire fraud charge.

Sean Allocca

Sean Allocca is the associate editor of Financial Planning, On Wall Street and Bank Investment Consultant.