On January 28, 2020, the SEC charged Edward E. Matthes, a former registered representative and investment adviser in Wisconsin, with defrauding 26 of his majority elderly clients out of approximately $2.4 million.
According to the SEC’s complaint, between April 2013 and March 2019, Matthes made misrepresentations to his clients, claiming that a new investment opportunity would generate a higher return for them and earn a guaranteed minimum yield of 4% per year. The claimed investment opportunity did not exist and Matthes simply stole approximately $1.4 million from his clients. Matthes allegedly used the money to renovate his home, pay child support and purchase various luxury items.
Matthes further misappropriated an additional $1 million of his clients’ money by allegedly making unauthorized sales and withdrawals from his clients’ variable annuities and depositing the money directly into his personal bank account instead of clients’ accounts. Matthes used all of the funds he raised for his own personal use and to operate a Ponzi-like payment scheme, paying $170,000 to certain, select customers.