Two twin brothers from Long Island, N.Y. who worked together as investment advisors have been found guilty of defrauding investors out of over $10 million, Investment News reports.
After an eight-week trial, a federal jury convicted Adam and Daniel Kaplan of wire fraud conspiracy, wire fraud, investment advisor fraud, and money laundering conspiracy. The two were found to have swindled about 100 victims, including elderly and mentally disabled individuals. The Kaplans were advisors at an investment advisory firm, IHT Wealth Management.
The U.S. Attorney’s Office said that between May 2018 and July 2021, the two used their positions of trust to steal money from clients through various schemes, and used the stolen funds for personal expenses and to purchase luxury goods.
“For example, the defendants consistently sent clients contracts to begin their client-advisor relationship,” the U.S. Attorney’s Office said. “The defendants promised these clients that their fees would be approximately 1% per year, and sometimes less. The contracts that the defendants sent their victims, however, did not include the specific fee percentage that they promised. Instead, it was blank. Based on the defendants’ lies, and the victims’ trust in the defendants, the victims signed the contracts with the fee portion of the contract blank. The defendants then filled in the fee percentage at a much higher rate than what was promised, sometimes more than four times as high.”
Prosecutors said Adam and Daniel Kaplan also siphoned money from their victims’ bank accounts without any authorization or approval and hid the charges from the victims by transferring money to the victims’ bank accounts from the victims’ own brokerage accounts in the exact amount that the defendants charged. Because of this, the balance of the victims’ account appeared unchanged.
To conceal the fraud, the Kaplans repeatedly lied to their clients about the fraudulent charges, forged their clients’ signatures on documents, and lied to financial institutions, according to prosecutors. The ,government recovered over a dozen fake contracts purportedly between the defendants and their victims for services such as “life coaching” or “divorce consultation” but the brothers never provided any of these services to their victims.
Along with convicting both brothers of the charges, the jury also found Adam Kaplan guilty on additional counts, including obstruction of justice and attempted bribery of Department of Justice officials. Adam Kaplan was charged with trying to cover up the fraud, while under federal investigation, by reportedly attempting to threaten, intimidate, and bribe witnesses, and destroy evidence.
“With today’s verdict, Adam and Daniel Kaplan stand convicted of stealing millions of dollars from clients, some of whom were elderly and disabled, who trusted the defendants to invest their money, but instead were betrayed by these ruthless thieves,” stated Joseph Nocella, Jr., United States Attorney for the Eastern District of New York. “Adam Kaplan is facing additional, very serious consequences for seeking to undermine the criminal justice process by attempting to threaten victims and witnesses and bribe Department of Justice officials.”
Prosecutors said the Kaplans’ victims included not only individuals who were elderly and disabled, but also family and friends. They took out a loan in an elderly victim’s name while she was caring for her dying husband; stole hundreds of thousands of dollars in fraudulent loans; and left the victim to pay the lender on her own.
The Kaplans were fired by IHT in 2021 after allegations of their activities surfaced, but their fraud continued. Previously the Securities and Exchange Commission filed charges against the brothers in 2023 accusing them of misappropriating more than $5 million from at least 60 clients, overcharging advisory fees, and making Ponzi-like payments to conceal their activities.
At Hyman Cotter PC, our attorneys understand the financial and emotional ramifications of investment losses caused by financial professionals and we have experience dealing with a broad range of claims that rise to the level of financial advisor misconduct. If you have suffered investment losses as a result of misconduct by your financial professional or their firms, contact Hyman Cotter PC at 312-291-4600 or through our online contact form for a free consultation.
