A Connecticut consultant who has been in prison for more than seven years has been ordered to pay nearly $1.5 million for allegedly defrauding at least nine investors.
Leon Vaccarelli Charged by the SEC In August 2017, failed to deposit client funds into a standard brokerage account as promised, instead using the funds for personal expenses or compensating early investors. In October 2020, he was sentenced to 90 months in prison by a Connecticut federal court after a jury found him guilty of three counts of mail fraud, nine counts of wire fraud, six counts of securities fraud and three counts of money laundering. About two months later, he was ordered to pay nearly $1.46 million in damages to clients in a civil suit.
in its sole case, SEC Charges Vaccarelli and His Company, Lux Financial Services Violated various provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. In one example cited in the regulator’s complaint, a customer approached Vaccarelli demanding an explanation of why his IRA statement showed a balance of less than $500.
Vaccarelli said there was a glaring typographical error, SEC Allegedly. The broker then wrote “$90,476” on the account statement to confirm the “actual” amount, the regulator said. In fact, only $476 was in the account, according to the SEC’s complaint.
He is also accused of requiring a client to sign an agreement that she would not report certain types of information to FINRA or the SEC. Vaccarelli is accused of selling more than $450,000 worth of securities held in custody for clients and using the money for business and personal expenses. Attempts to contact Vaccarelli’s lawyers were unsuccessful.
In the SEC case, U.S. District Judge Charles Haight ordered Vaccarelli to pay approximately $1.4 million in disgorgement plus $99,610 in prejudgment interest. That will be offset by the amount Vaccarelli has to pay in the criminal case, meaning he still owes $62,309.
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Vacarelli, who is serving time at a Massachusetts federal prison, was formerly affiliated with the Independent Broker-Dealers Investment Center. He was fired in July 2017 for “failing to comply with company policy regarding access to his offices and computers during the exam,” according to the BrokerCheck database maintained by FINRA.
Vaccarelli discloses 16 customer complaints and other matters His BrokerCheck page. In 2015, FINRA fined him $7,500 and suspended him for one month for accusing him of exercising discretion over client accounts without the client’s permission.
Michael Edmiston, a securities attorney at Jonathan W. Evans & Associates in Studio City, Calif., said the complaint led to Vacarelli being invested Center’s “enhanced supervision”, which means he should be subject to strict internal scrutiny. Edmiston said a proper scrutiny of Vaccarelli’s conduct should have exposed his misconduct earlier.
“With increased regulation, you’re not going to see that except in the worst-case scenario,” Edmiston said. “Even so, in this case, obviously it took two years Sending people around to look at his books and records. This could have stopped sooner.”
Investment Center CEO Ralph DeVito said in a 2017 statement: “We have cooperated fully with the SEC’s investigation since we became aware of Mr. Vacarelli’s situation. Raleigh is outraged by Mr Reilly’s alleged conduct and will continue to investigate the matter internally to assist with the ongoing investigation.”