CLEVELAND, Ohio – A Westlake financial adviser and two associates face federal criminal charges that accuse them of stealing nearly $10 million from clients in an investment scheme that used office fronts and call centers to hide the fraud, authorities say.
Raymond Erker, as well as Kevin Krantz and Tara Brunst, are charged with conspiracy to commit mail and wire fraud and other criminal counts in a scheme that lasted several years, according to an indictment unsealed this week in U.S. District Court in Cleveland.
Attorneys for the three were not listed in court records Friday. Attempts to reach the three were unsuccessful.
The indictment said Erker formed several businesses, including Sageguard LLC, GenSource Assurance Co. and Provident Securities Co. Krantz and Brunst worked with Erker, and each had an interest in a company that Erker owned, according to the indictment.
The charges alleged that Erker, Krantz and Brunst sold investments to 54 people for GenSource and Provident, obtaining more than $9.3 million in the scheme. The scheme began in about 2013 and lasted until July 2018, the indictment said.
The three told investors that they were buying annuities and secured notes from GenSource and Provident “with no exposure to risk of loss and with guaranteed rates of return,” the indictment said.
Neither company was authorized to issue annuities, and the notes from Provident were not secured, according to the charges.
The indictment said investor money was misappropriated or placed in high-risk start-up companies. The three ran the investments as a Ponzi scheme, which means they used new investors’ money to pay off misappropriated money taken from early investors, according to the indictment.
For instance, the indictment cited an example that happened Feb. 11, 2015 when a client invested $152,149 in GenSource. Two days later, $120,000 from that investor was sent to a previous investor, according to the charges.
The indictment said the three set up office fronts in Delaware and Nevada and contracted with call centers to make the operation appear legitimate. They also created false brochures.
The indictment alleged the three made misrepresentations to investors in office visits, phone calls and emails. Erker also is charged with money laundering and making false statements.
In court records, investors said they were promised returns of as much as 7 percent. Investors, some of whom were retirees, lost hundreds of thousands of dollars. Attempts to reach several of the victims late Friday afternoon were unsuccessful.
In August 2018, the Ohio Department of Commerce stopped Erker from working as an investment adviser.
That same month, Erker was convicted of burglary, stalking and telephone harassment in Cuyahoga County Common Pleas Court. Judge Nancy McDonnell sentenced him to probation for two years.