Ponzi plot pleads guilty for father-daughter team

The former controller and compliance officer of a New York financial planning firm has admitted to working alongside her father to defraud clients of more than $11 million in a deception they ran for decades .

Vania May Bell, 57, will be sentenced on July 7 after pleading guilty to one count of conspiracy to commit wire fraud, a crime that carries a maximum sentence of 20 years in prison and a fine maximum of twice the gross gain or loss of the offense committed.

The woman from New Jersey, who was an executive at Executive compensation planners, was first indicted in 2019 by a grand jury in the Southern District of New York. A day before his indictment, his father, Hector May, was sentenced to 13 years in prison and ordered to pay $8 million in restitution in a separate case.

May was also sentenced to serve three years of probation and lose $11,452,185.

Bell initially pleaded not guilty to charges of wire fraud and conspiracy to commit wire fraud. In a formal response to the 2019 court filing, Bell said it “never conspired, aided, concealed, deceived, and most importantly obtained economic benefit in any of these written allegations.”

But US attorney Damian Williams said Bell admitted in court late last month that she and her father had spent years breaching the trust of at least 15 clients by taking millions intended for investments. and spending them on personal and business expenses. The father-daughter duo also used the stolen money to live a life of luxury, with some of their purchases including diamonds, pearls and mink coats.

“Now she has confessed to her crime and faces a lengthy prison sentence,” Williams said in a statement.

Court documents say May became president of Executive Compensation Planners in 1982 and provided financial advisory services to numerous clients. Bell joined his father’s company in 1993 and held various titles, including controller and chief compliance officer.

In 1994, May joined Securities America as a Registered Representative when the broker began working with executive compensation planners. Court documents indicate that in its role as a broker, Securities America facilitated the buying and selling of securities for May’s clients.

Because May had no authority to withdraw money directly from Securities America accounts, he persuaded the victims to withdraw the money themselves and transfer those funds to an Executive Compensation “deposit account.” Planners so that he can buy bonds on their behalf. Court documents say he also told the victims they could avoid the deal flow by buying bonds directly through his company.

With Bell’s help, May guided her victims to withdraw money from their Securities America accounts and send that money to the custody account by wire transfer or check. At times, May falsely stated that the funds withdrawn were the proceeds of prior bond purchases.

After the victims sent their money to the Executive Compensation Planners deposit account, Bell and May transferred the money to an operating account for business expenses, personal expenses and to make payments to other victims. in order to maintain the scam.

Bell and May also created fake consolidated account statements that they issued through executive compensation planners and sent to victims. These statements were supposed to reflect the total balances of the victims’ wallets and included the names of bogus and bogus interest income.

Court documents say May provided Bell with the fraudulent information and that Bell created the computerized account statements that were distributed to the victims. To keep track of their ill-gotten gains, Bell processed the victims’ payments for the alleged bonds and entered them into an accounting program.

Investigators said the duo maintained this from the late 1990s until March 9, 2018, and got their goals to pass them over $11,400,000 in the process.

The investigation began in March 2018 after one of May’s clients moved to another broker who informed the client that his family’s accounts held little to no assets. Securities America conducted an unannounced RIA audit of May and fired him that month.

Federal authorities included the statements of several clients in their sentencing note when May was sent to prison. A client suffered a debilitating stroke in 2015 and May stole $175,000 while advising the client and his wife to take out a home equity line of credit rather than withdraw assets from bond funds, prosecutors say.

May also embezzled $1.5 million from pension plans covering at least a dozen employees, investigators say. Another restaurant owner customer told prosecutors that May and his wife dined out weekly while placing the bill in a personal account that they never paid.

“We keep replaying him and still can’t believe how many years he’s been living a double life,” the former client said in a victim impact statement. “We’ve lost sleep over it and feel so violated.”

Veteran securities attorney Bill Singer, who is not involved in the case, said the incident was the kind of scam that hurts both reputable advisers who aim to serve their clients well and the reputation of the wealth management regulatory structure.

Singer said the case, which he says has “striking similarities to Bernie Madoff,” makes it harder for good advisers to earn and retain the trust of those they advise. It’s also another example of a proven deception slipping under the radar of multiple agencies tasked with detecting it.

“At some point, the Wall Street regulatory community has to come to terms with the fact that this type of fraud is the most important item on its agenda, and what this case represents is all that’s wrong. with Wall Street regulations,” said Singer, who writes the “Broke and broker” Blog. “We keep reading about these horrific frauds that span one or two or three decades and involve many victims who are usually elderly or have physical or mental disabilities. There is something wrong with the way we regulate the industry when that continues to happen.

Singer, who worked as a regional attorney for FINRA’s predecessor, the National Association of Investment Dealers, also wonders how routine inspections missed a common scam that began so long ago. He adds that seeing the case resolved in criminal court means it has been allowed to drag on too long and authorities are responding to the damage done rather than preventing it from happening.

“It’s not a fancy cheat. It’s pretty much what happens on any street corner in town, and it’s called a Three Card Monte. The money isn’t at home. the broker, the money is not in the RIA…and we have honorable people who have been wiped out,” he said. “We don’t have neighborhood police. , and they must invest more in the industry.There is no longer a partnership between the regulator and the regulated because everything is contrary.

“Federal authorities need to try harder not to read toe tags in the morgue, as I often say. But they could have learned from this case. How could this have gone on for 30 years without anyone noticing?

Last summer, Advisor Group’s Securities America RIA agreed to pay a $1.75 million civil penalty and hire an independent compliance consultant to review its oversight policies after the The SEC alleged that his failures enabled May to embezzle millions.

In the more than three years covered by the SEC case, the company’s anti-money laundering analysts and other staff in the Financial Investigations Unit allegedly failed to act on 55 alerts suggesting suspicious payouts of customers, says the order. The “multiple alerts” should have “raised red flags”, according to the SEC.

Between November 2014 and the May termination amid allegations in March 2018, Securities America’s RIA “did not implement policies and procedures for reviewing automatically generated watch alerts after client disbursements” , says the SEC order. It also “failed to implement reasonably designed policies and procedures to review client disbursement requests for possible diversion before disbursements occurred.”

Without any contributions from May, Securities America had also paid nearly $14 million in three settlements with former clients who allegedly fell victim to the hijacking in July 2021.