SEC files charges against former Wausau broker, investment agent
WAUSAU, Wis. (WSAW) - A broker and investment agent in Wausau who was barred from the industry last year is now facing charges the U.S. Securities and Exchange Commission filed Tuesday.
Tony Liddle and his company, Prosper Wealth Management are facing three charges accusing Liddle of defrauding at least 13 of his clients, many of whom the SEC described in its complaint as “senior citizens.” Much of the complaint details what 7 Investigates previously reported in December.
The complaint states beginning in June 2019 and through May 2022, Liddle misrepresented how clients’ funds were used and the risks of the investments. Liddle lied to clients saying that their portfolios had become less safe; he offered to invest the funds in securities he said were lower risk. The clients agreed to the change and Liddle confirmed the investments through written statements, but Liddle never purchased any of the securities he indicated to clients.
Instead, the complaint reads that Liddle misappropriated the clients’ money and used a small portion of that money to “uphold the ruse” by giving clients what he claimed to be interest from the investments.
It states Liddle created a bank account in Prosper Wealth Management’s name, but the account was hidden from his other employees. The account is where the clients’ checks would come in and out of, and then be used for Liddle’s personal and business expenses, including his own salary.
“Liddle’s lies led many of the defrauded clients to believe they were receiving regular and reliable returns from their investment portfolios,” the complaint states. “The sobering truth was that – month in and month out – their principal was gone and what little interest they received was a lie to cover Liddle’s theft.”
The SEC complaint provides more details into Liddle’s “scheme.” It states Liddle misrepresented the risks associated with L Bonds sold by a securities company, GWG Holdings, along with similar investments. Liddle told clients the bonds offered safer and lower-risk investments than the clients’ existing portfolios. These representations got clients to sell their existing investments to purchase the bonds. The complaint states some of the money the clients provided to PWM included funds that were not previously managed by PWM.
For clients in the middle of 2020, Liddle told them about the securities market volatility given the COVID-19 pandemic. In the beginning of March 2020, the SEC stated Liddle “knew, or was recklessly unaware,” that GWG Holdings disclosed that investing in L Bonds “involved a ‘high degree of risk, including the risk of losing [one’s] entire investment,’” and that an “investment ‘may be considered speculative.’”
The complaint states further: GWG further disclosed on the second page of the 2020 Prospectus, “L Bonds are only suitable for persons with substantial financial resources and with no need for liquidity in this investment.” (emphasis in original.)
Liddle also was given GWG marketing material that he provided his clients, which includes that GWG had temporarily suspended sale of its L Bonds between April-Nov. 2021 and in Jan. 2022 it suspended further sales of the L Bonds. Despite all of this, “Liddle regularly made oral, written and electronic statements to his advisory clients and advised clients that the L Bonds were low-risk.”
Liddle set up personalized planning meetings, making clients feel safe about the choice to purchase the L Bonds. One client wrote “Safe Money Acct” on the memo line of the May 2021 check she sent to Liddle and PWM to invest the funds.
In another example, the SEC described: “...in December 2021 Liddle went to a nursing home to meet with a client where he handwrote notes outlining her investment plan. In those discussions, he guaranteed the safety of the L Bonds and wrote that the client could rely on a monthly interest payment—from the L Bond—on the first of every month. Liddle took a check for the L Bond investment from this client for $110,000, and never invested her money.”
Liddle continued to produce false reports to clients about their investments with GWG or similar investments, including telling one client in Jan. 2022 that her investment was secure and available for withdrawal.
“This client, happy with what Liddle had represented were interest payments from her invested L Bonds (purportedly purchased in July 2021, during the GWG 2021 Suspension) sent more money to Liddle to purchase additional L Bonds in January 2022 – during the GWG 2022 Suspension. He never did purchase the L Bonds for this client. Rather, he stole this second investment money, too,” the complaint states.
When one of his clients exposed Liddle’s acts, the SEC states that “he attempted to cover his theft by drafting promissory notes between his victims and PWM, backdating the documents, and forging his clients’ signatures.” He had told the Wisconsin Department of Financial Institutions that the clients had provided him loans, using these promissory notes as proof, however, his previous false PWM account statements showed the clients were invested in GWG or other securities -- not loans.
Liddle has 21 days to respond to the complaint, or else the judgment by default will be entered against him for the relief demanded in the complaint.
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