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CEO of New York advisory firm pleads guilty to fraud, false statement charges

On Behalf of | Nov 14, 2022 | Investment Loss

The chief executive officer of a New York financial advisory firm has pleaded guilty to wire fraud and false statement charges, according to InvestmentNews. The U.S. Attorney’s Office for the Southern District of New York announced the plea by 37-year-old Adam Belardino, CEO of the Maddox Group.

One of the charges involved embezzlement of a client’s funds. Prosecutors said Belardino convinced the client to liquidate over $313,000 from her portfolio and transfer the funds to the Maddox Group for investment. Instead of investing the money, he used it to pay his firm’s operating expenses, along with prior debt, credit charges for personal items, and personal travel. The client later told Belardino to transfer her portfolio from Maddox to her account at another firm, but even though he provided documents suggesting he made the wire transfer, the client never received any funds and the checks he deposited were returned due to insufficient funds in Maddox’s account.

Another charge involved a fraudulent scheme to obtain life insurance commissions. In May 2019, Belardino was the agent for an insurance company handling a client’s application for a $1 million life insurance policy whose amount was eventually raised to $18 million. Prosecutors said he later applied for two more life insurance policies without the client’s knowledge or authorization and made false statements about the client’s income, net worth and health. He also increased the face amounts of those policies without the client’s knowledge, and as a result received nearly $200,000 in commissions from the insurance companies.

In addition, Belardino pleaded guilty to making a false statement in connection with the fraudulent withholding of employee 401K contributions. The U.S. Attorney’s Office said he authorized a statement on an IRS form saying the Maddox Group had not failed to transmit employee contributions to the company’s retirement savings plan. But in fact Belardino had not deposited $8,000 withheld from the paychecks of four employees into the plan’s trust account and instead diverted the money to himself and Maddox.

The two counts of wire fraud each carry a maximum sentence of 20 years in prison, and the one count of making a false statement to the Internal Revenue Service carries a maximum sentence of five years in prison.
Belardino was barred by FINRA in September 2021, after he failed to cooperate with the authority’s investigation of his firing by MML Investors Services.

Lewitas Hyman routinely represents investors harmed when financial professionals and their firms engaged in misconduct that caused their clients investment losses. Our team includes lawyers who have worked for large financial institutions, including Morgan Stanley and UBS Financial Services, and regulatory bodies such as the SEC. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Lewitas Hyman at (888) 655-6002or through our online contact form (888) 655-6002 or through our online contact form for a no-cost evaluation of your matter