Former Investment Broker Charged In $1M Fraud
A former Sauk City investment broker was indicted Wednesday on federal charges that he defrauded investors out of nearly $1 million by using their money to pay personal expenses.
James Kolf, 64, was charged with 16 counts of wire fraud, one count of mail fraud and one count of money laundering stemming from a scheme to steal investors money between April 2011 and August 2016, according to the indictment, filed in U.S. District Court in Madison.
Each wire and mail fraud count carries up to 20 years in prison, and the money laundering count carries up to 10 years.
The indictment states Kolf worked as a broker-dealer agent and an investment adviser in Middleton and Madison, and starting in 2011, began soliciting existing customers he had at New England Securities, the company he worked for until 2015, to invest in SFN Financial Network.
In all, the indictment states he took $905,077 in investor funds that he never invested, instead using it for his own purposes.
According to the indictment:
Kolf made misrepresentations about SFN, claiming, for example, that SFN would use investor money to invest in energy companies, and that their investments would produce at least a 6 percent annual rate of return.
In fact, SFN Financial Network was not a legitimate investment and Kolf did not intend to invest any of the funds given to him, the indictment states.
To boost the credibility of SFN Financial Network to potential investors, Kolf gave investors prospectuses and marketing materials for the similarly named FS Energy & Power Fund, a legitimate investment.
In fact, SFN Financial Network and FS Energy & Power Fund were unrelated, and SFN Financial Network did not invest in that or any other energy or power company, the indictment states.
Instead, Kolf used the money to buy a house on Mulberry Street in Sauk City and make home improvements, make credit card payments, resolve an outstanding tax debt to the U.S. Treasury Department, pay property taxes and buy a 2015 silver Mini Cooper.
The government is seeking forfeiture of those assets.
Kolf also gave investors fictitious account statements showing year-to-date profits and portfolio balances. He also made payments to some investors, telling them that the payments were interest earned from their accounts, when he hadnt actually made any investments on their behalf.
The money laundering count is related to $280,534 Kolf withdrew in May 2014 from his SFN checking account, which was used to buy a cashiers check that Kolf used to buy his home in Sauk City.
State authorities have already revoked Kolfs licenses.
The charges were the result of an investigation by the Internal Revenue Service Criminal Investigation unit, the U.S. Attorneys Office said.
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