Ex- Wells Fargo Broker Faces 128 Felony Counts in Alleged $1M Ponzi Scam

John G. Schmidt, an ex-Wells Fargo (WFC) broker, is now facing 128 felony counts over his alleged running of a $1M Ponzi scam. Criminal charges include:

• 124 counts of forgery
• 1 count of telecommunications fraud
• 2 counts of theft from a disabled or older adult
• 1 count of deceit or fraud as an investment adviser

Many of his victims were older investors and/or investors suffering from dementia. According to a statement issued by the Montgomery County, Ohio Prosecuting Attorney’s Office, the former broker, who ran Schmidt Investment Strategies Group while working for Wells Fargo Advisors Financial, spent years defrauding investors in his Ponzi fraud that allegedly involved:

• Stealing money from investors’ accounts to conceal funds he’d stolen from other investors.
• Generating falsified financial statements to hide the thefts.
• Selling securities without investors’ knowledge or permission.
• Earning almost $250K in commissions from these unauthorized transactions.

A warrant was issued on December 27 for Schmidt’s arrest. His arraignment is scheduled for January 10, 2019.

The criminal fraud charges against the former Wells Fargo broker come a few months after the US Securities and Exchange Commission filed civil charges accusing him of defrauding his retail clients of $1M and committing variable annuity (VA) fraud. The regulator contends that he engaged in the unauthorized sales of customer-held variable annuities while “secretly transferring” more than $1M in proceeds to 10 other customers to hide deficits in their accounts.

The Financial Industry Regulatory Authority barred Schmidt in March. Previous to that, he was a Wells Fargo broker from 12/07 to 11/17, which was when the firm fired him over the senior investor fraud allegations.

Before Wells Fargo, Schmidt was registered with Stifel, Nicolaus, & Co. (SF), First Union Securities, First Union Capital Markets, PaineWeber, Prudential-Bache Securities, IDS Life Insurance Company, IDS Marketing Corp. and IDS Financial Services. He worked in the securities industry for nearly 30 years.

Broker Fraud
Making unauthorized transactions, falsifying or doctoring financial statements that are given to investors, transferring funds to an investor’s accounts to hide losses, and running a Ponzi scam are all acts of broker misconduct. At Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) our broker fraud law firm is here to help investors recoup losses sustained due to negligence or fraud.

Variable Annuity Fraud and Senior Investors
Our senior investor fraud lawyers are experienced in working with older investors and their families. Unfortunately, elderly investors, especially those with reduced physical or mental capabilities, are considered easy targets for fraudsters, including those seeking to perpetuate variable annuity schemes.

Variable annuities, which are investments through a life insurance company contract, are not appropriate for all investors– especially those that can’t take on too much risk. VAs typically charge high surrender fees, may come with serious tax ramifications, are better as long-term rather than short-term investments, do not provide guaranteed returns, and often charge high commissions and fees. Unfortunately, there are older investors who have been told that these are “safe” investments for them even when they could not handle the risks.

Contact SSEK Law Firm today if you were an investor who worked with former Wells Fargo broker Schmidt and lost money that you suspect may have been due to his $1M Ponzi scam.