Federal prosecutors announced that a former Wisconsin financial advisor has been sentenced to prison on wire fraud and tax evasion charges, according to Financial Advisor.
63-year-old Thomas Demergian of Madison, who defrauded clients out of $1.8 million over a 23 year period and evaded taxes on some of that money, was sentenced by U.S. District Judge William M. Conley to 4 ½ years in federal prison. He was also ordered to pay restitution.
Details of the case were disclosed by Timothy M. O’Shea, United States Attorney for the Western District of Wisconsin. He said that beginning in 2000, Demergian convinced certain clients to invest money with him through “IRT Company.” He falsely told clients that he would invest their money with real estate trusts and mutual funds. But once the clients sent their money to Demergian, he diverted those funds to a bank account in his own name and spent the funds for his own use.
Authorities said Demergian gave clients fictitious Investment Portfolio Summary sheets reflecting positive growth. “When clients asked him to liquate their investments, Demergian told clients that such a decision was imprudent or provide other untrue reasons why their requests could not be completed,” O’Shea said.
The fraud scheme was discovered in 2023 when a client’s family member began asking questions about the investments. It was eventually discovered that many victims lost a total of $1.8 million and that Demergian had used his clients’ investment funds for gambling, travel, cars, collectibles, and other personal expenses.
From 2017 to 2022, Demergian underreported his income on his tax returns by failing to disclose over $400,000 in illegally obtained income, thereby evading $104,779 in tax obligations.
At sentencing, Judge Conley said, “in terms of white-collar crime, this is the worst” because Demergian “cynically targeted elderly and vulnerable victims, many of whom he had also befriended.” The judge said the sentence was based on the lengthy nature of the conduct, the amount of money stolen, and the tremendous breach of trust. Demergian was credited for ultimately helping investigators identify the total losses, but the judge noted that Demergian only did so after he knew he had already been “found out.”
Demergian’s BrokerCheck record shows that FINRA permanently barred him from the industry in March 2023 after admitting to division staff that he “misappropriated at least $1.5 million from 14 investors over 20 years.”
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