A former broker and advisor who started his own independent advisory firm after leaving Merrill Lynch was arrested Monday in Southampton, New York, and charged with wire fraud, investment advisor fraud and money laundering tied to a scheme to misappropriate more than $1 million from current and prospective clients, according to the Justice Department.
According to an indictment filed last week in U.S. District Court for the Eastern District of New York in Central Islip and unsealed on Monday, Jeffrey L. Slothower, 43, of Southampton, allegedly wooed a California married couple whose money he managed at a previous firm to sign investment advisory contracts with his firm, Battery Private.
The Scheme
Slothower allegedly promised the victims he could beat any rate of return they were receiving without market risk and convinced them to let him invest their money in bonds backed by homeowner's association fees.
Between Jan. 25, 2017, and Jan. 27, 2017, "Victim-1" allegedly sent more than $500,000 to Slothower to be invested in the purported HOA bonds, according to DOJ.
But the money was not invested in HOA-backed bonds or held in "capital reserves;" instead, Slothower used the funds to, among other things, "wire money to himself, purchase a luxury automobile and pay fees for a private golf club on Long Island," according to DOJ.
"Victim-2" allegedly agreed to invest in the same purported bonds and, in or around December 2017, also sent more than $500,000 to Slothower to invest. However, Victim-2's money was used to, among other things, pay personal credit card bills, according to DOJ.
In June 2018, Victim-1 made another investment of about $84,000 that Victim-1 believed was for the purported HOA-backed bonds. But Slothower allegedly used the money to instead to, for instance, make purported quarterly payments to Victim-1 and Victim-2 that were falsely represented as their investment returns and to pay a private golf club on Long Island, according to DOJ.
