A.G. Underwood Announces Criminal Indictment of Queens Investment Advisor for Defrauding Elderly Clients of Nearly $5 Million
Dean S. Mustaphalli -- Owner And Operator of
Underwood: Mustaphalli Deceived and Took Advantage of
Mustaphalli allegedly engaged in a scheme to defraud investors -- many of whom were elderly and at or near retirement -- out of their savings by investing them in his hedge fund without their knowledge or consent. During the relevant time period, Mustaphalli's hedge fund collapsed, losing 92 percent of its value. The Attorney General's indictment, unsealed in
According to the Attorney General's criminal indictment, Mustaphalli's scheme brought in more than
"New Yorkers should be able to trust the people they turn to for investment advice," Attorney General Underwood said. "Yet, as we allege, Dean Mustaphalli deceived the clients that trusted him - looting and squandering millions from senior New Yorkers who relied on those savings. Our office will continue to crack down on unscrupulous financial advisors who scam and swindle New Yorkers out of their hard-earned money."
In
As set forth in court documents and according to statements made by prosecutors at arraignment, Mustaphalli's scheme allegedly targeted elderly New Yorkers who had been his investment advisory clients for many years before he opened his own hedge fund, and who had very little prior investment experience. As their investment advisor, Mustaphalli knew that these investors had relatively conservative investment objectives.
Nevertheless, beginning in 2010, Mustaphalli allegedly moved his clients' assets to a platform that would conceal his risky trading activity. Without explanation, and simply saying that the fund would be "better" for clients, Mustaphalli allegedly diverted his clients' relatively safe investment portfolios to a hedge fund run solely by Mustaphalli.
As further set forth in the civil complaint, Mustaphalli allegedly targeted his first wave of investors beginning in 2012, moving
As set forth in the criminal indictment and according to statements made by prosecutors at arraignment, after losing almost
According to court filings and statements made by prosecutors, Mustaphalli's clients allegedly had no idea that their retirement monies were being transferred into an extremely high-risk investment, much less to a hedge fund. To further his scheme, the defendant allegedly provided his clients with only the signature pages of fund documents, and forged his client's initials next to the portion of the documents entitled "Accredited Investor Status," which falsely stated the investors' net worth was over
By
According to prosecutors, most of the 22 investors named in the indictment allegedly lost all or most of their retirement savings, with losses totaling over
Mustaphalli allegedly sought to deflect blame for the losses by telling investors that the losses were due to "oil, bad markets, and the election." Mustaphalli allegedly promised one investor, "if Hillary wins, you'll get your money back," and told another that "Brexit" was to blame for the Fund's losses.
In the aftermath of these devastating losses, Mustaphalli allegedly used shell companies that he created to divert
The Attorney General's 99-count criminal indictment, unsealed late yesterday in
Mustaphalli was arraigned yesterday in
The charges are merely accusations and the defendant is presumed innocent unless and until proven guilty in a court of law.
The Attorney General thanks the
The Attorney General's criminal investigation was conducted by Investigator
The criminal case is being handled by Assistant Attorneys General
The civil case is being handled by Assistant Attorney General
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