Barred adviser pleads guilty to fraud involving private stock

A barred broker with 46 disclosures on his BrokerCheck profile pleaded guilty to two counts of fraud on Monday in federal court in Wisconsin.

Michael F. Shillin was a broker for nine years, starting in 2011 with Edward Jones before moving to Raymond James Financial Services Inc. in 2014 and then Alliance Global Partners in 2018. On Monday, he pleaded guilty to defrauding clients in two ways: by telling them he had bought shares private stock in well-known companies that he never bought, and by using clients’ collateral to obtain loans for himself.

According to his BrokerCheck report, the customer complaints he faces allege similar charges. Raymond James Financial Services in 2018 “discharged,” meaning fired, Shillin, for allegedly failing firm directions regarding the payment of client CPA fees.

In January, the Securities and Exchange Commission barred Shillin; the SEC alleged that, while he was working as an investment adviser, Shillin fabricated documents and made misrepresentations to clients, many of whom were elderly.

Shillin allegedly misrepresented that certain clients had successfully subscribed for IPO or pre-IPO shares in high-profile companies when they had not, and lied to clients about the true value of their investment portfolios.

The SEC complaint alleged that Shillin encouraged several advisory clients to roll over their existing life insurance policies into new policies, which caused certain clients to sell securities in order to pay premiums for policies that were non-existent or had far fewer benefits than Shillin claimed.

The SEC alleged that Shillin received hundreds of thousands of dollars in ill-gotten gains as a result of his fraudulent conduct.