A former Merrill Lynch advisor has been charged by federal prosecutors with allegedly scamming clients out of $2.7 million after he gained access to their funds by buying other advisors’ books of business.
Jared Dean Eakes, 31, of Jacksonville, Fla., was indicted on four counts of wire fraud last week after the FBI arrested him in Jacksonville and jailed him on May 20.
Eakes pleaded not guilty to all four fraud counts last week, according to a report in the Florida Times-Union.
The indictment, filed last week in U.S. District Court for the Middle District of Florida, includes a demand for Eakes to forfeit the $2.7 million the government says he "personally obtained from the charged scheme” from at least January 2019 through February 2020 after representing himself as a registered investment advisor to buy advisors’ books of clients on an online marketplace, according to the indictment.
The scheme happened after Eakes left Merrill, authorities said.
Eakes was only registered as an advisor rep with Merrill Lynch from April 2016 to February 2018 and was unregistered at the time of the alleged fraud scam, authorities said.
Both the Securities and Exchange Commission and Alabama authorities charged Eakes in 2022 but were unable to find him. The new indictment comes almost a year after the SEC told a judge that Eakes was “actively concealing his whereabouts” after the regulator filed a 2022 civil lawsuit accusing him of misusing client money to invest in his own brokerage accounts, pay down student loan bills and other debts and wire $116,000 to a Las Vegas casino for the purposes of a gambling spree.
Eakes operated under the auspices of GraySail Advisors LLC, a Florida-based RIA firm, according to the SEC civil suit.
While the full transfer of client assets was never completed, Eakes managed to move some clients to GraySail and allegedly stole about $2 million from 10 clients, according to the SEC.
Eakes accomplished the alleged theft using a forgery scheme that involved forging promissory notes from another business and cutting and pasting clients’ signatures to show clients bought the notes, the SEC said. The former advisor then filed the forged paperwork with the firm that managed the clients IRA accounts, convincing the firm to send payments for the notes from the IRA accounts to the business’s bank account, the agency said. The funds were then released to Eakes, who used them to supplement his own accounts and lifestyle, the SEC said.
The scheme was enabled by Dothan, Ala.-based advisor James Blake Daughtry, who sold his client accounts and never oversaw future transactions, as he had promised to do, according to a civil complaint the SEC filed against Daughtry. Daughtry, an advisor formerly affiliated with Kestra Investment Services and Ameriprise, was permanently barred by Finra for his role in the scheme in September 2022.