Ex-Advisor Convicted of Swindling Couple Out of $1M

A former New York registered investment advisor faces a potential 30-year sentence after being convicted of misusing over $1 million in client and prospective-client funds to pay for luxury items, including designer clothing and accessories and a country club membership.

A federal jury last week convicted Jeffrey Slothower, 46, founder of investment advisory firm Battery Private, of all three counts of an indictment charging him with wire fraud, investment advisor fraud and money laundering in connection with a scheme to misappropriate clients' assets, the Justice Department announced.

The verdict in a Central Islip, New York, court followed a three-day trial before U.S. District Judge Gary R. Brown, the department said, noting that Slothower faces up to 30 years in prison when sentenced.

Breon Peace, U.S. attorney for the Eastern District of New York, and James Smith, assistant director-in-charge, FBI, New York Field Office, announced the verdict.

"This case was about greed and betrayal of clients who trusted the defendant and thought their money was safely invested with him," Peace said.

"Slothower tricked those clients so he could steal their money and lavish himself with a new car, high-end clothing and jewelry, and a membership at an East End country club. Protecting investors from fraudsters like the defendant has always been a priority of this office and today's verdict underscores our resolve to vigorously prosecute those who enrich themselves at the expense of victims," the prosecutor added.

The former registered advisor and broker was found to have orchestrated a scheme to misappropriate more than $1 million from current and prospective clients, according to the Justice Department.

Specifically, while operating Battery Private, Slothower solicited business from "Victim-1″ and "Victim-2," a California couple whose money Slothower had managed at another financial services firm where he was previously employed.

(Slothower previously was affiliated with Merrill Lynch, Northwestern Mutual and Goldman Sachs, among other firms, according to the Financial Industry Regulatory Authority's BrokerCheck database.)

Slothower promised the couple he could beat any rate of return they were receiving, without market risk. In 2017, he offered to invest Victim-1's money into what Slothower described as bonds backed by homeowner's association fees, or "HOA bonds," which would pay an 8% return, according to prosecutors.

Slothower sent Victim-1 wiring instructions for his investment and attached a document that made additional representations about the purported investment, claiming that the money would be held in Battery Private's "capital reserves," the department said.

Between Jan. 25 and 27, 2017, Victim-1 sent more than $500,000 to Slothower at Battery Private to be invested in the purported HOA bonds.

Instead of investing in HOA bonds or holding the funds in "capital reserves," Slothower funneled the money into his personal bank accounts and then used those funds to purchase a $125,000 Mercedes-Benz SUV and membership dues at Long Island National Golf Club, prosecutors said.

Slothower made payments to Victim-1 that were falsely represented as quarterly distributions from this victim's "investment," according to the department.

Later, Slothower solicited Victim-1 to invest more money, including funds controlled by Victim-1's spouse, who was a Battery Private client. Enticed by the supposedly steady rate of return, Victim-2 agreed to invest in the same purported HOA bonds, and in December 2017, Victim-2 sent more than $500,000 to Slothower at Battery Private.

Like Victim-1, however, Victim-2's money was not invested in HOA bonds or held in "capital reserves" as represented by Slothower, who instead used that money to pay tens of thousands of dollars in personal credit card debt traced to an approximately $6,500 Chanel purse, a roughly $13,000 Rolex watch and over $11,000 in Ralph Lauren clothing, among other items.

Slothower also made payments to Victim-2 that were falsely represented as quarterly distributions from the client's investment.

In June 2018, still unaware of the fraudulent scheme, Victim-1 made an additional investment of about $84,000 into the purported HOA bonds. Slothower used Victim-1's money to make purported quarterly payments to Victim-1 and Victim-2 that were falsely represented as their investment returns and to pay membership dues at the private golf club, the Justice Department said.

In 2021, the Securities and Exchange Commission filed a civil complaint against Battery Private and Slothower, alleging that he engaged in two separate fraudulent schemes, including misappropriating about $1.18 million from an advisory client and her then-spouse, a prospective advisory client.

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Ex-Advisor Convicted of Swindling Couple Out of $1M

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Ex-Advisor Convicted of Swindling Couple Out of $1M

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