(Insurance News Net) A Lilly resident and former investment adviser pleaded guilty this week in federal court to charges of securities fraud, wire fraud and filing false income tax returns, according to a PR sent out by U.S. Attorney Scott W. Brady on Friday.
Douglas P. Simanski, 53, pleaded guilty to five counts before U.S. District Judge Kim R. Gibson.
In connection with the guilty plea, it was established that between February 2002 and May 2016, Simanski devised and executed a scheme to fraudulently obtain approximately $4.5 million from various investors.
As part of his scheme, Simanski fabricated "tax free investment" contracts and "fake CDs" that listed guaranteed rates of return and payouts, and used the documents to solicit investors. Simanski used portions of the invested funds to pay "returns" to other investors to make it appear their investments were legitimate.
He also used a portion of the funds to purchase personal items and to fund personal home improvement projects, and placed some of the funds into a personal E*Trade account. Information was also presented to the court that Simanski filed false income tax returns for 2012, 2013 and 2014.
Simanski was an independent financial adviser with NEXT Financial Group's Altoona branch until 2016, when his criminal acts came to light.
"He sold his customers investments that essentially didn't exist, and instead turned around, took those moneys and converted them to his own use," Philadelphia attorney Nicholas Guiliano told The Tribune-Democrat in 2016. He represented four of Simanski's alleged victims.
One of Simanski's alleged victims was the Veterans of Foreign Wars post in Ashville, Cambria County, where Simanski was a social member.
NEXT Financial Group fired Simanski for "conversion of funds" in May 2016, according to a letter from Simanski to the Financial Industry Regulatory Authority's Department of Enforcement. Registration records indicate that he had been registered with NEXT since August 1999.
Simanski was also barred by FINRA from working in the financial industry.
Sentencing has been scheduled for 10 a.m. April 4, 2019. Simanski faces a maximum total sentence of 49 years in prison, a fine of $6 million or both.
Assistant United States Attorney Stephanie L. Haines prosecuted the case on behalf of the government, according to Friday's press release. The Internal Revenue Service Criminal Investigation and the U.S. Secret Service conducted the investigation that led to the prosecution of Simanski.
