Publicly available records provided by the New Jersey Bureau of Securities and accessed on June 20, 2018 indicate that the Bureau has sanctioned New Jersey-based advisory firm Financial Planning Advisors, as well as its owner, Richard Belott, in connection with allegations they defrauded elderly customers. Fitapelli Kurta is interested in hearing from investors who have complaints regarding Financial Planning Advisors and/or Mr. Belott (CRD# 4725262).
According to the Bureau, Richard Belott participated in sales of unregistered securities “to at least eight investors,” including elderly and retired customers. He then allegedly used at least $1.55 million of the investors’ funds on personal expenses, “including his daughter’s college tuition, extravagant trips for himself and his wife, and mortgage payments on the couple’s beach house.”
The Bureau’s findings state that Mr. Belott and Financial Planning Advisors, from 2008 until 2015, offered and sold “at least 24 promissory notes” which they represented as issued by local diners as well as a developer; he allegedly represented to customers that their funds were investments in the businesses in question. However, according to the Bureau, his investors did not receive promissory notes from the diners or the developer, but instead from the owners of the businesses in question, “who had undisclosed business relationships with Belott.” The Bureau states that at least one note was issued by Mr. Belott himself. As for the promissory notes, according to the Bureau, they came with a term of one year, or longer, and their interest rates ranged from 5% annually to 18% annually. The diners, developer and Financial Planning Associates made interest and principal payments from their bank accounts.
The Bureau found that in connection with the offering and sale of these promissory notes, Mr. Belott failed to make various disclosures, including: that the purported promissory note issuers—the diners and developer—were customers of his accounting firm; that he maintained outside business relationships with the businesses’ owners; that he was a co-owner of “some of the diners”; that he, in fact, received a commission payment on certain promissory note sales; and that he planned to use his customers’ funds for his own personal expenses, such as his daughter’s tuition payments and personal travel.
Paul Rodriguez, Acting Director of Division of Consumer Affairs, said in a statement: “Elderly clients of FPA trusted Belott, as their financial advisor, to guide them in making wise investments. Instead, he lured them into a fraudulent investment scheme to enrich himself. These investors, some of whom risked their entire retirement savings on Belott’s scheme, had no idea that he was using their funds to subsidize his lavish lifestyle.” In connection with these findings, Financial Planning Advisors and Mr. Belott were assessed civil penalties totaling $500,000. The Bureau additionally issued a revocation order stripping them of their registrations.
“As this case illustrates, even trusted advisers sometimes try to fraudulently solicit money from their elderly clients,” Bureau Chief Christopher Gerold said in a statement. “It is, thus, critical that senior investors, and their caregivers, remain vigilant and take steps to protect their assets.”