Adam Belardino, chief executive of the Maddox Group, a financial advisory firm with offices in New York City and other locations, pled guilty Thursday in U.S. District Court for the Southern District of New York to two counts of wire fraud related to schemes to defraud clients and one count of making a false statement to the IRS.
Each of the two fraud charges carries a maximum sentence of 20 years in prison, according to a statement from the U.S. Attorney's Office for the Southern District of New York, while the false statement count carries a maximum sentence of five years in prison.
The first client had worked with Belardino at his previous firm. He convinced her to sell some of her investments and send the funds to him to invest at Maddox. She sent more than $313,000 in eight transactions between August 2019 and October 2020, but instead of investing the money, Belardino used it to pay the firm’s operating expenses, such as rent and payroll, as well as personal expenses.
After the client asked that her portfolio be transferred to another brokerage in September 2021, Belardino delayed for months before providing documentation of a wire transfer to her bank account, which the client never received, and sending a check, which bounced due to insufficient funds.
The second count of fraud involved a client of Belardino’s who applied for a $1 million dollar life insurance policy from one insurance company, which was later increased to $1.8 million. Belardino later applied without the client’s knowledge for two other insurance policies, one for $3 million and the other for $5 million. He later boosted one policy to $6 million and the other to $12.1 million, again without the client’s knowledge. Belardino received about $195,497 in commissions on the policies.
The false statement count relates to the Maddox Group retirement savings plan, and a statement Belardino authorized on an IRS form saying that the company had not failed to transmit employee contributions to the plan. In fact, from November 2020 until August 2021, Belardino withheld $8,000 from paychecks of four employees who participated in the company’s retirement plan but failed to deposit the money in the plan’s trust account.
The Financial Industry Regulatory Authority Inc. barred Belardino in September 2021, after he failed to cooperate with Finra’s investigation of his March 2019 firing by MML Investors Services, according to his BrokerCheck report. MML terminated or fired Belardino at that time “in connection with investigation of a customer complaint,” according to BrokerCheck.
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