A former Ohio investment advisor was sentenced yesterday to 262 months in prison for operating a Ponzi scheme that robbed at least 54 investors of $9.3 million, according to the U.S. Attorney’s Office for the Northern District of Ohio.
Raymond A. Erker, 52, of Westlake, Ohio, was found guilty in March of one count of conspiracy to commit mail fraud and wire fraud, one count of mail fraud, three counts of wire fraud, five counts of money laundering and one count of making a false statement under oath. The trial lasted seven days.
His associates, advisor Tara M. Brunst and accountant Kevin M. Krantz, pleaded guilty and were previously sentenced for their roles in the scheme. Brunst was sentenced to six months in a community treatment center and three years of supervised release. She also was ordered to pay more than $300,000 in restitution. Krantz was sentenced to two years of probation and ordered to pay more than $12,000 in fines and restitution.
Erker, according to court documents, owned several investment and asset management companies under the Sageguard Wealth Management brand beginning in 2003. He also formed GenSource Financial Assurance Company in September 2012 and Provident Securities in January 2015.
From January 2013 through July 2018, Erker devised a scheme that stole $9,366,976.37 from at least 54 investors, authorities said. As part of the scheme, authorities said, Erker, with the help of Brunst and Krantz, induced clients to buy investments he misrepresented as annuities and senior secured notes with no risk of loss and with a guaranteed rates of return. The clients believed they were purchasing annuities and senior secured notes in GenSource and Provident, but neither company was authorized to issue such investments.
Erker, according to court documents, without the approval or consent of investors, diverted funds to other entities that they controlled and their personal bank accounts. He also failed to disclose to clients that he owned the companies receiving investments from the scheme.
“To keep up with promised rates of return, Erker falsely represented that payments to previous investors were rates of return and interest when, in actuality, these payments were new investor funds, the defining characteristic of a Ponzi scheme,” the U.S. Attorney's Office said in a press release.
To conceal the scheme, Erker set up office fronts in Delaware and Nevada, contracted with call centers and created bogus websites and account statements that purported to show investor account balances.
“Erker was also convicted of making a false statement under oath. On October 9, 2019, while under oath in the United States Bankruptcy Court for the Northern District of Ohio, Erker stated that he disclosed to investors that he owned the companies the investors gave him money to invest in, when in fact, Erker knew that statement to be false,” the U.S. Attorney's Office said.
According to Brokercheck, Erker entered the industry in 1999 and worked for three companies, including The Equitable Life Assurance Society of the United States and Lincoln Financial Advisors Corporation. He moved to Merrill Lynch in 2001. His longest tenure was with LPL Financial from 2003 to 2010. In 2011, he joined JP Turner & Company Capital management for a year, then spent five months at Allstate Financial Services before branching out on his own.