Risk Management

Stockbroker Accused of Stealing $1.1M

The fraud involved real estate tax lien certificates that the broker told clients would earn 6% to 9% annually.
Matthew HellerNovember 24, 2015

A Pennsylvania stockbroker has been accused of misappropriating more than $1.1 million in investor funds to pay for renovations on his house and other personal expenses.

The U.S. Securities and Exchange Commission said Monday that Bernard M. Parker, 54, conducted a fraudulent securities offering from 2008 through 2014 through Parker Financial Services, a side business he did not disclose to his employer. FINRA records identify Edward Jones as his employer.

The alleged fraud involved raising more than $1.2 million from his longstanding brokerage customers and others, telling them they were purchasing legitimate real estate tax lien certificates and would earn returns of 6% to 9% annually, but using only a small amount of the funds to actually purchase lien certificates.

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Parker “used the overwhelming majority of the funds to remodel his house, pay his father-in-law’s medical bills and other personal expenses, and to make interest payments to earlier investors to ensure that his scheme was not discovered,” the SEC said in a civil complaint.

In a related case, a federal grand jury indicted Parker last week on criminal securities and mail fraud charges.

“We allege that while Parker was using investor funds for his personal expenses, he provided investors with computer printouts of vacant lots or homes and falsely told them that his company held liens on those properties,” Sharon B. Binger, director of the SEC’s Philadelphia regional office, said in a news release. “Once he gained their trust, investors gave Parker thousands of dollars apiece for purported investments, and he swiftly stole their money.”

According to the SEC, Parker operated Parker Financial out of his Indiana, Pa., home, telling at least one investor he had he had taken a class in tax lien certificate investments. Investors allegedly gave him amounts ranging from $3,500 to $50,000.

Of the $1.2 million Parker raised, the SEC said, he withdrew more than $650,000 in cash from teller transactions, ATM withdrawals, and checks cashed at local supermarkets. He additionally spent approximately $197,000 of investor money in point-of-sale transactions, $150,000 through personal checks, and $169,000 for online bill payments.