This article was originally published by Financial-Planning.com
An LPL Financial advisor stole at least $2.8 million from her clients to buy several homes and enrich herself during more than a dozen years of lying and forgery, according to the SEC.
Sonya D. Camarco faces five counts of fraud charges and an asset freeze after investigators said she used third-party checks and other means to forward client funds toward personal expenses like mortgage and credit card payments. The SEC filed charges against the fired broker this week in Colorado District Court.
The case marks the agency’s second in the last four weeks against advisors with the nation’s largest independent-broker dealer. However, the 23-year industry veteran based in Colorado Springs saw her scheme fall apart following a probe opened in July by LPL’s special investigations unit, court filings show.
The firm also may have averted what it feared could be an attempted suicide or self-harm. LPL asked local law enforcement to make a welfare check at Camarco’s home earlier this month after she sent an email titled “Final Request” to a vice president with the investigations division and an LPL attorney, according to an affidavit from the vice president.
P.O. BOX SCHEME
Camarco had forged clients’ signatures on at least 129 first- and third-party checks, having them sent to a post office box at a UPS store and signing them over to an entity she controlled, C Investments, according to the SEC. Camarco bilked one widow victim for more than $1 million, investigators say.
“Camarco used investor accounts to pay hundreds of thousands of dollars in credit card bills, took cash advances on investor accounts, transferred investor funds directly to her personal bank account, and funneled investor funds through Camarco Investments into her personal bank account,” the SEC says.
An attorney listed as representing Camarco, 45, did not return requests for comment Thursday afternoon and Friday morning. Camarco did not return a phone message left at her family’s home.
LPL fired her Aug. 9, saying she had forwarded her clients’ funds into a bank account she controlled for her personal use, according to FINRA BrokerCheck. Camarco, who had no previous disclosures on her record, started at LPL in 2004 following three years at Morgan Stanley and six years at Merrill Lynch.
“LPL discovered a matter involving apparent misconduct by Ms. Camarco and notified the appropriate regulators and law enforcement,” spokesman Jeff Mochal said in a statement. “We are investigating this matter further internally and continue to cooperate with ongoing investigations.”
Investigators believe the fraud began around the time Camarco joined LPL. The widow and one of her daughters, two longtime clients, found unauthorized transactions worth $1.5 million after LPL alerted them to third-party checks from their accounts to Camarco Investments, their affidavits show.
The daughter had “noticed unexpected drops in my account balances” at various times over the years, her affidavit says. One time she confronted Camarco, saying she didn’t understand why her account balance had fallen since she only withdrew funds for mortgage payments, the document shows.
“In response, Camarco suggested to me that I need to work more because I spend more money than I earn,” the client said in the filing.
An SEC Enforcement Division investigator traced 30 first-party checks for $437,692 and 99 third-party checks for $2.04 million sent to the post office box, according to another affidavit filed this week. The funds came from 19 different client accounts, the investigator said.
A trust in the name of Camarco and her husband owns five houses, according to the SEC. Client funds accounted for at least some of the property in the trust’s name, and some of the client money also paid for mortgages on other properties, investigators say.
LPL’s investigations unit had discovered the P.O. box after the firm’s internal systems flagged a request July 27 from one of Camarco’s clients for a third-party check made payable to C Investments, according to the company’s investigator. The vice president and the company lawyer interviewed her days later.
Asked about the possible unlisted outside business activity, Camarco first said C Investments was an outside investment into a wine venture, according to the LPL investigator. Camarco declined to answer further queries without a lawyer when they pressed her on the checks and her bank accounts.
The company fired her less than a week after the meeting. Two days later, Camarco sent the email with the “Final Request” subject line, copying an incorrect address for an SEC enforcement attorney, the LPL executive says.
“I’m asking that you allow my family, friends and community to continue to believe that I’m a good person,” Camarco wrote, according to the document. “I would like for their lasting memory of me to be the loving wife and parent that I’ve worked hard to be.”
The LPL executive notified the sheriff’s office in Colorado Springs, and the authorities sent a deputy to her home to check on her, according to the affidavit. Almost four hours later, a deputy called the executive back to report that Camarco was safe and “getting the help she needed,” the filing shows.
The SEC charged her this week with three counts of fraudulent schemes and two counts of fraud by an investment advisor. A federal judge froze her assets, citing “good cause” to believe Camarco might move client funds from her accounts.
The agency is seeking full disgorgement of the funds back to the clients. The judge scheduled a hearing in the case next week.
A spokesman for the Denver U.S. Attorney’s Office said no criminal charges have yet been filed and said Department of Justice policy prohibits confirming or denying an investigation.