A broker discharged by LPL Financial earlier this year has pleaded guilty to running a Ponzi scheme that cost his clients close to $5 million.
James Booth pled guilty to securities fraud that involved raising approximately $4.9 million from around 40 investors, the U.S. Attorney’s Office for the Southern District of New York says in a press release. From 2013 through 2019, Booth convinced clients of his financial services firm, Booth Financial Associates, that he would invest their funds outside of their ordinary advisory and brokerage accounts, directing them to transfer money to a bank account of Insurance Trends, Inc., an entity he controlled, according to the press release.
He then used the funds for covering personal and business expenses, the U.S. Attorney’s Office says.
Booth also created bogus account statements purporting to show that he had purchased securities on behalf of the investors in a bid to conceal his fraud, according to the press release.
The former broker faces up to 20 years in prison, with his sentencing scheduled for Feb. 21, the U.S. Attorney’s Office says.
Booth had been in the financial services industry since 1988 and became registered with LPL as a result of its 2018 acquisition of National Planning Holdings, whose subsidiary Invest Financial Booth had joined in 2005, according to his BrokerCheck record.
LPL discharged him in May over allegations that he had admitted to misappropriating client funds while registered at a previous firm, according to BrokerCheck. Before LPL, Booth had been registered with Invest Financial from 2005 to February 2018, according to his profile.
Finra began investigating Booth the same month he was discharged from LPL, and barred him in July over allegations that his clients invested at least $1 million which he then used to cover his personal expenses.
Last month, the SEC charged Booth in a parallel case, accusing him of fleecing his clients out of $4 million.