Justin Paperny says he's seen a sizable increase in financial advisor clients this year. (Photo: Philip Weung)
"I sold my soul for money."
And it went downhill from there, says Justin M. Paperny, who served time in federal prison for conspiring to commit fraud when he was a UBS financial advisor. But his is a story of sin and redemption, as he tells ThinkAdvisor in an interview.
Since his release in 2009, he has put his calamitous experience to good use as a high-profile prison consultant to high-profile white-collar felons.
Founder of White Collar Advice — which he established while in prison — Paperny, 45, is the go-to guy for guiding defendants on how to prepare for sentencing, including trying to secure a reduced sentence; how to start rebuilding while incarcerated; and post-release, how to create the best outcomes. His third book is "Prepare: What Defendants Need to Know" (2019), co-written with Alec Burlakoff.
Amid the pandemic, Paperny now counts among his clients felons who have exploited the Paycheck Protection Program: Instead of funding payroll, they used the government money to buy Rolex watches, fancy cars and chartered private jets.
"It's stealing. You go to prison for that," he says in the interview.
The consultant's clients are multimillionaires and billionaires — among them, many politicians and celebrities. Fees average in the $10,000 to $250,000 range. But he also helps financially struggling defendants.
Among his well-heeled clients are six families that are defendants in the sprawling college admissions scandal, he says.
In the last year, Paperny has had a sizable increase in clients who are financial advisors. The crimes center on pump-and-dump stock schemes, stealing from their clients' accounts and insider trading.
Paperny founded White Collar Advice in 2008, while serving an 18-month sentence in Taft Federal Prison Camp in California, for aiding and abetting another UBS advisor who was running a lucrative Ponzi scheme.
The soul-selling he talks of relates to accepting a 7-figure signing bonus when he and his then-partner moved their practice from Bear Stearns to UBS.
After a 13 months of incarceration, Paperny was released on three years' probation. By then, he was well on his way to reinventing himself as a prison consultant and ethics speaker warning about white-collar crime.
Today, he also trains financial advisors and FBI agents (Factoid: While under investigation, he lied in an interview with the FBI). Clients include Allstate, Grant Thornton, KPMG International, Morgan Stanley, Securities America and Wells Fargo.
A lecturer, Paperny speaks at (or Zooms to) Georgetown University, the University of San Diego and his alma mater, the University of Southern California, among others. Often, current clients join him to discuss — and perhaps bolster — their cases.
ThinkAdvisor recently interviewed Paperny, who was speaking by phone from Irvine, California, near his company's headquarters in Dana Point. A brief email exchange followed.
A TV series based on his first two books — "Letters from Prison" and "Ethics in Motion" — is in the works for CBS All Access.
Produced by actor-comedian-producer Will Arnett and penned by a TV comedy writer, it's "kind of a comedy" loosely based on Paperny's life after prison, the consultant explains. He has read some of the in-process pilot script. "It's actually pretty funny," he says.
As comedians Steve Allen and Lenny Bruce noted: "Tragedy plus time equals comedy."
Here are highlights from our interview:
THINKADVISOR: Have you any clients seeking your services because of pandemic-related issues?
JUSTIN M. PAPERNY: We currently have two defendants who have been indicted for misusing Paycheck Protection Program funds. People are exploiting that government program.
And they're going to prison?
Oh, good God! You get a $500,000 loan from the government and say you're going to fund your payroll with it — but you use it to buy Rolexes, cars, clothes and fly on private jets. That's fraud — it's stealing. You go to prison for that.
Do you try to help many clients get a reduced sentence?
Yes. As a result of our mitigation work, our clients frequently get sentences that are lower than what prosecutors recommended. Mitigation consulting helps develop a strategy to influence a better outcome. Done well, it will show that the defendant is far more than the wrongdoing. But they must build a compelling case. We help them frame a story that contextualizes the totality of their life and makes them more human and relatable.
To what extent do you have clients in the financial services industry?
I've seen a bit of a pickup [in those] over the last year. I've had defendants indicted for more pump-and-dump stock schemes than I had in the previous four years. I've had more stockbrokers, financial advisors and marketers for penny stocks in the last year than I had in the prior couple of years combined. I've had clients with marketing schemes that defraud the average investor and [those who execute] market manipulations with penny stocks. I've had stockbrokers dipping into their clients' funds. One hired me this morning after he was caught.
Any other examples of defendants who work in financial services?
I have two clients in the brokerage industry in New York who have been indicted for insider trading. Also, in the last year I've had more tax cases, involving accountants primarily, than I've had in a while.
Why has there been such an increase in clients that are in financial services?
A lot of it [comes to] what catches a U.S. Attorney's Office's attention and their priorities. Is it sexy enough for them to move forward? A lot of cases are from tipsters. That's how the [Operation] Varsity Blues [code name for the investigation into the college admissions bribery scandal] case started.
Who was the tipster?
Someone in the case had been indicted for stock fraud — a pump-and-dump stock scheme. When they arrested him, the first question the FBI asked was: "Is there anything you'd like to tell us?" Many investigations begin with a cooperating witness.
