A suspended broker has pleaded guilty to raising money from investors who followed him on social media and then misappropriating it for his own luxury purchases, according to Financial Advisor.
The U.S. Attorney’s Office for the Southern District of New York announced that 42-year-old Kenneth Thom of Westfield, New Jersey entered the plea to a charge of investment adviser fraud.
In January 2011, the Financial Industry Regulatory Authority suspended Thom’s broker registration after he failed to pay an arbitration award to an investor. Thom also admitted to FINRA that he had commingled the client’s money with his own money in an account he controlled and then lost the money trading. He further admitted that when the investor sought to withdraw her funds, he did not tell her he lost it and instead invented fake excuses, then ignored the investor altogether.
After being suspended by FINRA, prosecutors said Thom turned to social media under the monikers “K$” and “K Money,” and promoted himself online as a successful trader, a “Wall Street veteran,” a “luminary,” and a “beacon of knowledge.” He allegedly used his online platforms to sell trading courses and trade suggestions to his followers, including a Facebook group in which he posted the results of his purportedly successful trades.
“Beginning in late 2023, Thom invited members of the K$ Facebook Group to participate in “shared accounts” that Thom would manage in exchange for a percentage of the trading profits,” the U.S. Attorney’s office said. “Thom eventually raised nearly $800,000 from approximately 67 clients. Of this sum, Thom invested only approximately $350,000, diverting most of the remainder for his own personal use, including on travel, dining, and luxury goods.”
Of the $350,000 that Thom invested, he lost more than $250,000 trading options for a net loss of approximately 73%. To hide the losses, prosecutors said he published false performance updates showing significant gains. For example, on or around July 3, 2024, THOM posted in the K$ Facebook Group that each of his three purported shared accounts was positive year-to-date, with returns ranging from 4% to 120%. In fact, as of the close of the preceding trading day, THOM had lost approximately 31% of the client funds he invested to date.
“Kenneth Thom pretended online to be a successful investor and adviser when in fact he was a suspended broker and grifter,” said U.S. Attorney Jay Clayton. “He recruited social media followers, convinced them to invest with him, and then stole their money.” Clayton added, “Especially on social media, we remind investors to always protect themselves from fraud by verifying the credentials of those they invest with, and to always protect investments through due diligence.”
The charge of investment adviser fraud, carries a maximum sentence of five years in prison. Thom is scheduled to be sentenced on June 25.
The attorneys at Hyman Cotter have decades of experience dealing with securities fraud cases and have a deep understanding of how capital markets and financial service firms are intended to work to protect investors. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Hyman Cotter at (833) 665-0784 or through our online contact form for a no-cost evaluation of your matter.
