Adviser faces nine years in prison for diverting investment funds

A St. Louis-area financial pitchman has been sentenced to serve nine years in prison and pay more than $3.6 million in restitution to clients who participated in a real-estate investment program he used to pay personal expenses and salaries.
Prosecutors said Bryan C. Binkholder used YouTube videos, a talk-radio show and books such as the “The 401(k) Conspiracy” to cultivate clients in a fraudulent “hard money lending” program.
As part of the program, Mr. Binkholder — also known as “The Financial Coach” — said he would act as a bank for real-estate developers looking to purchase, renovate and re-sell homes.
The adviser made only a limited number of those loans, instead using the millions to pay personal expenses, interest to other investors and a salary for his wife, prosecutors said.
“The only thing we’ve done is trying to be business people — fund loans and scratch together money from all sources which ‘to the letter of the law’ with securities is ‘comingling’,” he said in an email to a colleague presented as evidence. “Since I have a license and am a little out there with the radio, frankly, it’s made us more visible.”
The fraud occurred from approximately 2008 to 2013, according to a grand-jury indictment.
Mr. Binkholder, of Wentzville, Mo., also was affiliated with an adviser background-check website that drew fire from advisers who were asked to consent to and pay for background checks on themselves. The website no longer exists.
Mr. Binkholder pleaded guilty to four counts of wire fraud in January. His sentence came after a hearing before U.S. District Judge Ronnie L. White in a St. Louis federal court.
“This is a case where the sentence, I believe, was draconian when contrasted to similar offenses and sentences handed down in connection with them,” said Albert S. Watkins, a lawyer at Kodner Watkins, who represented Mr. Binkholder and said he was a victim of a depressed real estate market. “Mr. Binkholder was not a Bernie Madoff type. The amounts involved were obviously significantly less, for one, and two, this is a man who did not take money for the purpose of enriching himself personally or driving fast cars or living a loose life with wayward women or engaging in a lavish lifestyle.”
A filing released Monday indicated that Mr. Binkholder plans to appeal the sentence, in part, on the grounds that his family is “forced to live off public assistance” due to his incarceration and that he has an 80-year-old mother.