Financial Advisor Sentenced To 42 Months In Prison On Fraud And False Statement Charges | USAO-SDNY

Financial Advisor Sentenced To 42 Months In Prison On Fraud And False Statement Charges | USAO-SDNY

Damian Williams, the United States Attorney for the Southern District of New York, announced that ADAM BELARDINO, the previous chief govt officer of the Maddox Group, was sentenced in White Plains federal court to 42 months in prison for fraud in connection with separate techniques to defraud shoppers and to fail to spend over contributions made by Maddox Team employees to the Maddox Team 401(k) system.  BELARDINO had beforehand pled guilty to two counts of wire fraud and 1 depend of creating a bogus statement to a govt agency.  He was sentenced today by U.S. District Decide Kenneth M. Karas.

In accordance to the allegations in the Superseding Information and facts to which BELARDINO pled responsible and other court files:

Embezzlement from Sufferer-1

BELARDINO had managed Target-1’s investments at an additional business right before he started Maddox in July 2019.  In August 2019, BELARDINO confident Victim-1 to liquidate some of her portfolio and to transfer the liquidated cash to Maddox for financial investment.  Victim-1 then transferred more than $313,000 to Maddox in 8 individual transactions in between August 2019 and Oct 2020.  As an alternative of investing Sufferer-1’s funds as he had promised, BELARDINO applied her dollars to shell out the working expenditures of Maddox, which include payroll and office environment hire to fork out down prior debt to pay credit rating card costs, which consisted principally of personalized things and to fork out for particular vacation. 

In September 2021, Sufferer-1 directed BELARDINO to transfer her portfolio at Maddox to her brokerage account at a further business.  From September 2021 to February 2022, BELARDINO despatched Victim-1 and members of her relatives email messages and texts in which he mentioned he was liquidating the portfolio and would return the cash shortly.  BELARDINO also provided Target-1’s family members with files suggesting that a wire transfer of the resources to Sufferer-1’s financial institution account was imminent or pending.  BELARDINO also deposited checks drawn on a examining account held by Maddox (“the Maddox Account”) into Victim-1’s lender account for what he claimed was the entire worth of her portfolio. 

Victim-1 by no means received any resources by wire and the checks BELARDINO deposited into her lender account were being returned due to the fact the Maddox Account did not have ample money to protect the checks.  BELARDINO despatched associates of Sufferer-1’s household email messages and texts in which he mentioned in material and in element that he was operating with financial institution officers to solve the trouble and that his loved ones would repay Target-1 if he was unable to do so.  BELARDINO also despatched associates of Victim-1’s family a doc that falsely stated that the Maddox Account experienced enough cash to repay Target-1.

Plan to Get Fraudulent Existence Insurance Commissions – Target-2

In or about Might 2019, BELARDINO served as the agent for Insurance coverage Enterprise-1 in relationship with an software by Victim-2 for a lifetime insurance policy coverage with a confront quantity of $1 million, which volume was ultimately improved to $18 million.  As an agent, BELARDINO acquired commissions from Coverage Business-1 at the time Sufferer-2’s application was authorised. 

In or about April 2020, BELARDINO utilized for a lifetime insurance policy plan with a experience sum of $3 million with Insurance coverage Organization-2 on behalf of Sufferer-2 without the need of Target-2’s know-how or authorization.  BELARDINO designed materially bogus statements about Victim-2’s earnings, net well worth, and health and fitness in the application.  In or about August 2020, BELARDINO prompted Coverage Enterprise-2 to raise the encounter amount of money of the policy to $6 million without Sufferer-2’s understanding or authorization.  BELARDINO compensated and tried to pay out the coverage rates of $194,280 with Sufferer-2’s cash with no her understanding or authorization.  BELARDINO been given about $84,997 in commissions from Insurance plan Enterprise-2.

In or about January 2021, BELARDINO utilized for a existence insurance plan plan with a face volume of $5 million with Coverage Organization-3 on behalf of Victim-2 without the need of Sufferer-2’s know-how or authorization.  BELARDINO made materially untrue statements pertaining to Victim-2’s cash flow, net worth, and well being in the application.  BELARDINO prompted Coverage Firm-3 to enhance the face amount of money of the policy to $6.5 million in March 2021 and to $12.1 million in Could 2021, all devoid of Target-2’s knowledge or authorization.  BELARDINO paid out the coverage premiums in a complete quantity of $105,000 with Sufferer-2’s resources without the need of her knowledge or authorization.  BELARDINO gained about $94,500 in commissions from Insurance Company-3.

Untrue Statement in Connection with Fraudulent Withholding of Worker 401(k) Contributions

BELARDINO adopted a retirement discounts strategy pursuant to Title 26, United States Code, Section 401(k) (the “Plan”) on behalf of the Maddox Group that turned effective on January 1, 2020.  He served as the trustee of the Prepare.  Underneath the System, an worker of Maddox could elect to have revenue withheld from his paycheck just about every fork out time period in an amount of money he chose in just specified legal limits.  BELARDINO was essential to deposit these withheld cash into the System for investment at the employee’s direction in different possibilities made available by the System.  Taxes on the money deposited to the Approach as very well as gains from expenditure of all those resources would be deferred.  BELARDINO was needed to deposit resources withheld for the Strategy into the Plan’s believe in account for investment decision in just 7 enterprise days.

From on or about November 1, 2020, as a result of on or about August 13, 2021, BELARDINO withheld $8,004.67 from the paychecks of the four Maddox staff other than himself who selected to participate in the System.  BELARDINO unsuccessful to deposit these withheld resources into the Plan’s believe in account and in its place converted those cash to his and Maddox’s use.

On or about October 14, 2021, BELARDINO licensed the Plan administrator to file with the Interior Income Company a Type 5500-SF for the 2020 calendar yr in which he falsely answered in the damaging when questioned “During [2020]:  Was there a failure to transmit to the approach any participant contributions . . .?”

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In addition to his prison sentence, BELARDINO, 36, of New York, New York, was sentenced to three many years of supervised release.  He was also requested to pay restitution in the amount of $501,499.67 and to forfeit $501,499.67.   

Mr. Williams praised the fantastic investigative operate of the Particular Agents of the Federal Bureau of Investigation and Legal Investigators of the Personnel Gains Stability Administration of the United States Office of Labor.

The prosecution of this situation is becoming handled by the Office’s White Plains Division.  Assistant U.S. Legal professional James McMahon is in charge of the prosecution.