A Michigan stockbroker has been charged with mail fraud in connection with an alleged Ponzi scheme that bilked investors out of over $6 million. Martin T. Wegener, of Grand Rapids, faces the criminal charges after previously being charged by the Securities and Exchange Commission in a parallel civil proceeding.
From at least 2007 through March 2010, Wegener was a registered representative at NES, a broker-dealer registered with the SEC. Through his position at NES, Wegener encouraged investors to withdraw funds from their brokerage accounts and represented to investors that he would invest their funds through several companies he owned and operated, including Wealth Resources, Inc. and Wealth Resources, LLC (collectively, "Wealth Resources"). Investor funds were allegedly placed in a variety of investments, including publicly traded stocks and mutual funds, private companies in which Wegener had an interest, and other private companies and funds. In return, investors received purported account statements, a sample which is provided below:
In total, Wegener received at least $6.5 million from roughly twenty investors, whose investments had grown to a total of $10.5 million by April 1, 2010. However, rather than use client funds to purchase the described investments, Wegener used customer money for, among other things, the payment of expenses for several private companies in which he had an ownership interest, and to make Ponzi-style payments to existing investors in the form of principal and interest distributions. Additionally, nearly $1 million of investor funds was transferred to the personal bank accounts of Wegener.
If convicted of mail fraud, Wegener faces a maximum sentence of twenty years in federal prison along with criminal monetary penalties.
A copy of the SEC complaint is here.