Massachusetts Investment Adviser Pleads Guilty In $3M Fraud

An Orleans investment adviser pleaded guilty in federal court Monday to defrauding her clients out of more than $3 million and using that money to buy luxury vehicles and vacations.

Kimberly Kitts, 51, pleaded guilty to four counts of wire fraud and one count each of investment adviser fraud and aggravated identity theft, according to a statement from the U.S. Attorney's Office. Prosecutors had filed a criminal information Sept. 18, according to a federal court docket. Such a filing details the charges but does not involve a grand jury.

Kitts initially was sued by the Securities and Exchange Commission on July 19 for stealing money from clients. The allegations and clients are the same in the criminal case in which she pleaded guilty.

The commission's complaint alleges that, since 2011, Pitts forged withdrawal requests to misappropriate her clients' money, forged wire and check requests to misappropriate money from brokerage account funds and misled a client into withdrawing money from a retirement account so she could deposit the funds into her own bank account.

Between July 2011 and June 2013, Kitts made unauthorized withdrawals from the variable annuities of six of her clients, totaling $962,654, the complaint says.

In June 2013, she began to steal money from the brokerage accounts of three clients, two of whom were a retired married couple. In total, she allegedly stole $806,000 from the retired couple and just over $2 million from the other client's account, according to the complaint.

In all, she embezzled $3,085,939 from clients, according to the criminal information.

According to the complaint, Kitts created tax forms for a fake company to hide her theft from Royal Alliance Associates Inc., the company that listed her as a registered adviser. Royal Alliance had requested account statements from Kitts after it saw wire transfers from one client's brokerage account to her business account.

Kitts is scheduled to be sentenced March 20 in U.S. District Court in Boston.

She initially was released on an unsecured bond, and she remains free pending sentencing.

The civil litigation against Kitts is ongoing.

Boston attorney Peter Elikann said civil cases usually lag behind their criminal counterparts when they are going on at the same time, because the outcome in one can be used as evidence in the other. Elikann is former chairman of the Massachusetts Bar Association's Criminal Justice Section.

Because criminal cases are usually more serious, they are allowed to proceed first, he said.

Kitts could be ordered to pay restitution to the clients she stole from. She may not, however, be ordered to pay the same restitution twice if she is found civilly liable for her theft. Civil courts can levy civil penalties, fees and fines, Elikann said.

-- Follow Wheeler Cowperthwaite on Twitter: @WheelerReporter. Follow Ethan Genter on Twitter: @EthanGenterCCT.

___

(c)2018 Cape Cod Times, Hyannis, Mass.

Visit Cape Cod Times, Hyannis, Mass. at www.capecodtimes.com

Distributed by Tribune Content Agency, LLC.