BULLETIN: SEC Says Boston Church Scammed By Fraudster While Dual Probes Were Under Way; Federal Judge Freezes Assets Of Arnett L. Waters; A.L. Waters Capital LLC And Moneta Management LLC Also Charged

BULLETIN: Arnett Lanse Waters, 62, of Milton, Mass., was “permanently barred” on March 9 “from association with any” Financial Industry Regulatory Authority member for failing to provide testimony” in a FINRA probe, the SEC said.

This ban occurred after Waters — in 1993 — was “censured and barred for two years by the New York Stock Exchange for forging a document to secure a bank loan and refusing to comply with the Exchange’s requests for information and testimony,” the SEC charged.

Regardless, a Boston-area church appears to have plowed $500,000 into Waters’ fraud scheme via a “subscription agreement” on March 22, about 13 days after the FINRA ban and nine days after Waters was interviewed by the SEC in its developing probe based on the FINRA matters, the agency said.

The church received a “a copy of the Private Placement Offering Memorandum on March 15,” about six days after the FINRA ban and a week before entrusting Waters with the $500,000 “capital contribution,” according to court filings.

Early details are sketchy, but court filings by the SEC suggest that at least some of the church’s money was misdirected by Waters and his wife to pay for a lawyer and personal expenses — and none of the money went toward what the church believed it was investing in: a portfolio of securities.

Charged in the alleged caper, which affected investors other than the church, were Waters and two business entities under his control: broker-dealer A.L. Waters Capital LLC of Braintree and investment adviser Moneta Management LLC, also of Braintree.

Named relief defendants were Janet Lee Waters, 55, of Milton, and a purported funds business known as Port Huron Partners LLP of Braintree. The funds allegedly were under the control of her husband, with Janet Waters serving as chief compliance officer of A.L. Waters Capital.

Janet Waters also was banned by FINRA on March 9, the SEC said.

A federal judge has granted an asset freeze, the agency said.

“The Court’s order further provides that the defendants are prohibited from soliciting or accepting additional investor funds and from altering or destroying any relevant documents, and also requires the defendants to provide an accounting of their assets and uses of investor funds,” the SEC said.

“The defendants used fictitious investment-related partnerships to draw in investors, misappropriate their investment money, and spend it on personal expenses,” the SEC said, alleging that the scheme dated back at least to 2009 and raised at least $780,000 from at least eight investors, including the church.

Stories about securities fraud and other crimes (or civil offenses) occurring even as investigations of purported opportunities are under way may be unusual, but are not rare.

Recidivist securites huckster Robert Stinson Jr. of the Philadelphia region was accused by the FBI in 2010 of wiring stolen funds even as a raid was under way. He later was accused of hiding assets and hatching a companion fraud scheme.

Stinson was sentenced last month to more than 33 years in federal prison.

Meanwhile, federal prosecutors in the District of Columbia alleged last month that accused  Ponzi schemer Andy Bowdoin of AdSurfDaily was involved in at least two fraud schemes after the U.S. Secret Service seized tens of millions of dollars from his bank accounts in a 2008 Ponzi probe.

Bowdoin faces up to 125 years in federal prison, if convicted on all counts of wire fraud, securities fraud and selling unregistered securities. Like Stinson and Arnett Waters, Bowdoin was described by investigators as a recidivist huckster.

Read the SEC complaint against Waters.

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2 Responses to “BULLETIN: SEC Says Boston Church Scammed By Fraudster While Dual Probes Were Under Way; Federal Judge Freezes Assets Of Arnett L. Waters; A.L. Waters Capital LLC And Moneta Management LLC Also Charged”

  1. Thom: Saw this whilst browsing and though you would like to know :)

    http://www.fbi.gov/boston/press-releases/2013/milton-man-sentenced-to-17-years-for-orchestrating-large-ponzi-scheme-and-massive-mail-fraud

    Thom

    Thanks, Thom. I was aware of the developments in the Waters case, but haven’t published an update yet.

    On a side note, I’ve been gathering information on what appears to be another fraud scheme with a tie to Massachusetts and have been awaiting comment from investigators there.

    With any luck, I’ll have a story on that soon. The “program” is known as UPrivateBanking.

    Patrick

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