Prosecutors: Former Westlake financial adviser admits to charges in Ponzi scheme that fleeced investors out o - cleveland.com
CLEVELAND, Ohio – A former financial adviser admitted Thursday to her role in what federal prosecutors called a Ponzi scheme that fleeced 54 investors out of $9.3 million.
Tara Brunst, 47, of Olmsted Falls, pleaded guilty in U.S. District Court to five charges, including conspiracy, wire fraud and mail fraud. She faces eight to 14 months in prison when Judge Dan Polster sentences her May 5.
Brunst worked with Raymond Erker and Kevin Krantz at an investment firm in Westlake. In documents, Assistant U.S. Attorney Brian McDonough said the three ran a Ponzi scheme, a financial scam that uses new clients’ money to pay those who initially invested. He said in court filings that Brunst helped recruit people to invest in the scheme.
The scheme began in 2013 and ran until 2018, prosecutors said. Brunst began working there in 2015.
During the hearing Thursday, McDonough said Brunst was responsible for the loss of between $150,000 and $250,000. He cited her limited time at the business.
An investor, Thomas Cooper, told Polster that Brunst met with him about his investments. She also emailed and talked with him and introduced him to Erker, who owned the businesses.
Cooper said Brunst abused his trust, which led to the loss of his life savings.
Erker and Krantz are to go to trial March 1 on similar charges before Polster. Erker is also charged with money laundering and making false statements under oath. Erker and Krantz have denied the allegations.
“We understand that Miss Brunst made a decision based on her personal needs, but we look forward to the opportunity to challenge the government’s evidence,” said Edwin Vargas, Erker’s attorney.
Krantz’s attorney, Justin Roberts, could not be reached for comment.
Court records show Erker formed several businesses, including Sageguard LLC, GenSource Financial Assurance Co. and Provident Securities Co.
Erker, Krantz and Brunst are accused of making false and misleading statements to get people to contribute to the funds, according to the charges. They told investors that they were buying annuities and secured notes from GenSource and Provident that had no exposure to risk of loss and had guaranteed rates of return, the charges allege.
Neither company was authorized to issue annuities, and the notes from Provident were not secured, according to the charges. Investors’ money was misappropriated or placed in high-risk start-ups, court filings indicate.
McDonough alleged in documents that the scheme involved placing office fronts in Delaware and Nevada and working with call centers to make the operation look legitimate.
In 2019, the Ohio Department of Commerce revoked Erker’s license as an investment adviser.
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