Hector May, a registered investment advisor and 40 years securities industry veteran, pled guilty in federal court in New York in December 2018 to two counts of securities fraud. These securities fraud charges included conspiracy to commit wire fraud and investment advisor fraud. The former investment advisor faces up to 25 years in prison for securities fraud.
May was president of Executive Compensation Planning, Inc. (“ECP”) in New City, NY. ECP was affiliated with Securities America, Inc., and investment advisory headquartered in La Vista, NE. The SEC has also barred May from serving as an investment advisor, who is from Orangeburg, NY, and from any affiliation with the securities industry.
The federal prosecutor alleged that May and his daughter, Vania Bell May, who also worked at ECP, operated a classic Ponzi scheme from the 1990’s until March 2018. May convinced 15 of his clients that they should transfer funds from their existing Securities America accounts to new accounts from which May would purchase bonds and other investments on their behalf. In reality, the funds were delivered into a consolidated ECP brokerage account controlled by May and his daughter. They used the funds deposited in the fake investment account for personal and business expenses including cars, jewelry, country club dues, etc. The government alleged that May and his daughter stole $11.5 million from their clients.
May and his daughter were able to carry out the securities fraud for so long by creating fraudulent account statements connected to their investment advisory that they sent to their investors that purported to show securities purchases, interest credits, etc. The monthly account statements falsely detailed the inflated value of the clients’ holdings. According to the SEC, one client’s fake December 2017 statement listed securities valued at $8.6 million. In reality, that client only had $51,000 in securities at that time.
May and his daughter also furthered their fraudulent investment scheme by using the stolen client funds to pay other victims who asked for disbursements from their phony securities accounts. The classic ponzi scheme pattern at play.
Two former investors, Robert and Judith Jamieson of Riverside, CT, have filed a lawsuit for securities fraud in connection with the ponzi scheme in federal court in White Plains, NY. Their suit alleges losses of $18 million. They have named Securities America as a defendant, alleging Securities America failed to supervise May, leading to their losses. The suit further alleges that several “red flags” appeared in or about 2003 but that Securities America ignored the early warnings of fraudulent behavior.
Ponzi schemes occur all to frequently in the securities industry. Clients who have questions or concerns regarding the handling of their brokerage and/or retirement accounts should contact the securities fraud attorneys at Lubiner, Schmidt & Palumbo for a consultation.