A former Pennsylvania stockbroker who was kicked out of the securities industry and ordered to pay millions of dollars in damages to customers he allegedly fleeced faces trial Monday on an unusual set of criminal fraud charges.
Anthony Diaz was fired by five brokerages and resigned from another amid persistent customer complaints and rules infractions. Yet he kept investing other people’s money until Wall Street’s self-regulator had seen enough and permanently barred him in 2015.
Some investors say they lost their life savings because of Diaz.
“These were exclusively retirees or people close to retirement age when they met Diaz," said Adam Gana, a veteran securities lawyer who represented some of his former customers. “Widows, elderly, unsophisticated investors who were totally bilked by him."
The ex-broker has said through his attorney that his actions were “proper and legal." He pleaded not guilty to an 11-count indictment alleging wire and mail fraud. Each count carries a maximum 20-year prison sentence.
Jury selection is set to begin Monday in Scranton.
The trial comes amid a court battle over a new Trump administration rule that requires securities brokers to keep the interests of their customers ahead of their own. Democrats and consumer advocates have said the rule actually weakens investor protections, and seven states and the District of Columbia have sued the Securities and Exchange Commission to block it.
Once regarded as one of the nation’s top brokers, Diaz earned millions of dollars over a 15-year career by pushing high-fee, high-risk “alternative investments” meant for wealthy, sophisticated investors. Prosecutors say he had unsuspecting clients sign blank documents, then falsified their net worth, income, investment experience and risk tolerance to make it appear they met the suitability requirements of the products.
What Diaz sold as “no-lose” investments with guaranteed rates of return were, in fact, highly speculative and came with long holding periods that tied up clients’ money, according to court documents.
The stockbroker also lied to clients about having been fired, the indictment said, claiming he left each firm voluntarily.
The criminal charges against Diaz are “unbelievably rare," according to Gana. While brokers have been charged with outright theft, Gana said, “I can't recall a single indictment of a broker for falsifying documents and making unsuitable investments.”
A phone call and email were left with Diaz’s lawyer, Darren Gelber, seeking comment on the government's case.
Gelber asked a judge to block prosecutors from telling the jury that Diaz had been fired repeatedly and barred from selling securities, saying the information was prejudicial and irrelevant. Judge Malachy Mannion denied the request last week, meaning that jurors will be free to hear about Diaz’s lengthy disciplinary record.
Two years ago, the Financial Industry Regulatory Authority ordered Diaz to pay some $4 million in damages to 19 former clients. He has not complied, an agency spokeswoman said last week.
Gana said he looked for assets owned by Diaz that could be used to satisfy the damage award but came up empty, “which is unfortunate because he left a lot of damage in his wake.”
Diaz has skipped out on at least one other judgment.