Former Morgan Stanley Advisors Pleads Responsible to $7M Ponzi Scheme

A former Morgan Stanley advisor faces as much as 30 years in jail after pleading responsible to defrauding shoppers of $7 million, based on the Division of Justice.

Shawn Edward Good pleaded responsible in North Carolina federal courtroom to counts of wire fraud and cash laundering for operating the scheme, after being charged by the DOJ earlier this yr. (He additionally confronted related prices from the Securities and Change Fee in April.) 

“This funding advisor breached the belief of at the least a dozen shoppers, taking up $7 million—cash he promised would go to low-risk investments—and used it to line his pockets, shopping for actual property, luxurious automobiles and holidays,” U.S. Lawyer Michael Easley mentioned. “This decade-long rip-off has lastly come to an finish.”

Good labored as a registered rep and funding advisor consultant for Morgan Stanley from 2012 to 2022, and with Wells Fargo and Charles Schwab previous to that, based on his BrokerCheck profile

Beginning in 2012, Good started operating a Ponzi scheme on various his shoppers by soliciting investments for purported actual property tasks and municipal bonds. In keeping with the SEC’s grievance, he instructed shoppers the investments had been low-risk and would supply returns as excessive as 10% over three to 6 months.

To finish the investments, Good satisfied shoppers to entry liquid asset traces of credit score backed by their Morgan Stanley accounts, and would direct them to switch these funds into their very own private financial institution accounts after which into his personal private account, based on the DOJ. 

Nevertheless, Good didn’t use the cash to put money into the actual property or bonds, however as an alternative he used new buyers’ funds to repay earlier buyers; in 2020 and 2021 alone, he used about $1.6 million of latest funds to pay again buyers, based on the SEC.

He additionally used the funds for private bills, together with funds on his home in Wilmington, N.C., in addition to a Florida apartment, automobiles that included a Mercedes Benz, a Porsche Boxster, a Tesla, an Alpha Romero Stelvio and a Lexus, in addition to holidays to Paris, Italy, Wyoming and Las Vegas, based on the Justice Division. 

There have been additionally greater than $110,000 in Venmo funds, with memo traces together with “as a result of youre attractive (sic), “tattoo,” and “Lodge for Future,” amongst others, based on the SEC grievance from April.

Considered one of Good’s Morgan Stanley shoppers was a divorced mom of two children who’d acquired almost $2 million from a divorce settlement, and labored with him to speculate it, based on the SEC. In February, the consumer recorded two calls with him, through which he mentioned he was engaged on returning her funds.

“As well as, Good discouraged (the investor) from contacting legislation enforcement and from hiring a lawyer, who Good mentioned would begin ‘digging round’ and thus ‘hamstring’ Good’s efforts to redeem the supposed investments,” the SEC grievance learn. 

Morgan Stanley declined to remark, however based on the SEC, the agency fired Good in February after he’d refused to cooperate with an inside investigation in regards to the purported scheme.