Former Advisor Admits Guilt For A Case Involving Two Major Fraud Schemes

A former advisor has admitted guilt in a case involving two major fraudulent schemes, pleading guilty to wire fraud and bank fraud charges that together carry a potential maximum sentence of 50 years in prison. The case underscores critical risks for wealth management professionals, particularly around compliance, due diligence in advisor-to-advisor transactions, and vigilance regarding fraudulent acquisition activity in the RIA space.

Jared Eakes, 34, of Jacksonville, Fla., entered his plea acknowledging responsibility for misrepresenting himself as a legitimate acquirer of advisory practices and for exploiting pandemic-era relief programs. His conduct highlights vulnerabilities that independent advisors and RIAs must guard against, especially when considering succession, selling a book of business, or evaluating counterparties in M&A discussions.

Fraudulent Acquisition of Advisory Books

According to federal prosecutors, from January 2019 through February 2020, Eakes operated a fraudulent scheme in which he posed as a successful advisor seeking to purchase other advisors’ books of business through an online marketplace. The premise of his pitch appeared legitimate to unsuspecting professionals considering a sale, but the funds provided were ultimately misappropriated.

Eakes misused approximately $2.7 million obtained through these transactions, channeling withdrawals into cash, personal spending, and gambling at a Las Vegas casino. He also diverted client funds into speculative options trading strategies. None of these activities were authorized by clients or aligned with fiduciary obligations.

For RIAs and wealth advisors, this case illustrates the importance of thorough due diligence when engaging with potential buyers of advisory businesses. Advisors looking to transition their practice should verify not only registration status but also financial capacity, prior conduct, and regulatory standing of counterparties. Overlooking these steps increases exposure to fraud, reputational harm, and potential regulatory scrutiny if client assets are compromised in a deal.

PPP Loan Fraud

The second scheme involved abuse of the federal Paycheck Protection Program (PPP), designed to provide Covid-era relief for businesses maintaining payroll during the pandemic. Eakes admitted to securing nearly $4.8 million through four fraudulent applications. The loans were not used for legitimate payroll support but instead supplemented his misuse of investor funds.

For financial professionals, this element of the case is particularly notable because many advisors assisted business-owner clients with PPP applications. The fraudulent exploitation of the program underscores the reputational damage advisors risk when associated with misrepresentation in federally backed programs. It also highlights how some individuals attempted to exploit crisis-driven relief efforts, a factor that regulators continue to review closely.

Evasion of Regulators and SEC Actions

The Justice Department and the Securities and Exchange Commission detailed how Eakes attempted to avoid detection. According to the SEC, throughout 2023 the commission made multiple unsuccessful attempts to serve him with a civil complaint. Officials noted he appeared to be “actively concealing his whereabouts,” with family members also refusing to cooperate.

Such behavior compounded the seriousness of the violations. Beyond the fraud itself, evasion of regulatory inquiries often results in harsher penalties and bans from the industry. Advisors should note that regulatory bodies maintain broad authority to investigate, and lack of cooperation is itself grounds for disciplinary action.

Indeed, the Alabama Securities Commission had already banned Eakes from the industry in 2022, citing his misappropriation of funds from clients of one of the advisors whose book of business he had acquired. That action came before the full extent of his misconduct was revealed through federal investigations.

Short Career, Lasting Consequences

Eakes’ time in the wealth management industry was limited. He registered as a broker with Merrill Lynch in 2016 and added registration as an investment advisor in 2017. His tenure there ended in February 2018, after which he attempted to establish his own independent firm.

In 2019, he formed GraySail Advisors, the entity prosecutors say he used as a vehicle for fraud. GraySail’s registration as a registered investment advisor lasted only six months, with its most recent Form ADV in August 2019 listing just $10 in assets under management. Despite its lack of credibility, Eakes leveraged the firm’s RIA status to create the appearance of legitimacy when soliciting transactions with other advisors.

For wealth advisors considering independence or engaging with emerging RIAs, the case serves as a cautionary tale. Proper due diligence must include reviewing regulatory filings, verifying assets under management, confirming custodial relationships, and assessing firm stability. Advisors should be wary of counterparties whose filings or operational scale do not align with claims about success or acquisition capacity.

Arrest and Forfeiture

The FBI arrested Eakes in Jacksonville in May 2024. As part of his plea agreement, he consented to forfeit nearly $7.5 million in proceeds from the fraudulent activities, including both the investor scheme and the PPP fraud.

While forfeiture is intended to provide restitution, it is unlikely that all affected parties will be made whole. Advisors whose practices were targeted in these transactions may face reputational fallout, compliance questions, and the challenge of explaining circumstances to their clients—even if they were unwitting victims themselves.

Lessons for Advisors and RIAs

The Eakes case carries several important lessons for professionals across the wealth management industry:

1. Due Diligence in Practice Sales and Acquisitions

   • Advisors exploring succession or sale of their practice should go beyond surface-level assessments of buyers.

   • Verifying assets under management, custodial relationships, financing sources, and regulatory history is critical.

   • Advisors should engage legal and compliance experts to structure protections into any transaction.

2. Regulatory Vigilance

   • Regulatory filings, such as Form ADV, are public records that can reveal inconsistencies. A prospective buyer listing $10 in AUM should raise immediate red flags.

   • Advisors should also monitor enforcement actions, bans, or disciplinary histories when assessing counterparties.

3. Reputation Risk

   • Even indirect association with fraudulent actors can cause long-term damage to an advisor’s reputation. Advisors must communicate transparently with clients if a transaction partner is revealed to be under investigation.

4. Fraud Awareness in Relief Programs

   • Advisors who assisted clients with PPP or other relief programs should maintain strong documentation and compliance records. Regulators continue to review these transactions, and fraudulent cases remain a focus of enforcement.

5. Industry Impact of Scandals

   • High-profile fraud cases within the RIA community can invite increased scrutiny from regulators. Firms should expect ongoing focus on acquisition practices, succession planning arrangements, and cross-advisor transactions.

Conclusion

For wealth advisors and RIAs, the case of Jared Eakes is a stark reminder that fraud can arise not only from client interactions but also from advisor-to-advisor relationships. As consolidation in the advisory industry accelerates, especially with heightened interest in practice acquisitions, advisors must strengthen due diligence processes.

Beyond the direct financial losses, such fraud undermines trust across the wealth management profession. Advisors committed to fiduciary responsibility should use cases like this as a call to reinforce compliance, implement safeguards, and educate clients on how their advisors evaluate counterparties.

Eakes’ guilty plea brings closure to a case that has disrupted careers, damaged reputations, and revealed vulnerabilities in practice acquisition channels. For advisors, the path forward is clear: enhanced diligence, greater transparency, and an unwavering commitment to ethical standards that protect both clients and the profession.