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Posted in  SEC Enforcement Action, Red Flag, Broker Theft, Ponzi

UNITED STATES SECURITIES : AND EXCHANGE COMMISSION, : Plaintiff, v. JOHN GREGORY SCHMIDT : JURY DEMANDED Defendant. CASE NO. 18-cv-320

For the past 35 years, Defendant John Gregory Schmidt has been a registered representative associated with a series of broker-dealers, including the past 11 years with a large, SEC-registered broker-dealer. (“Broker A”). Over his career, Schmidt attracted a loyal base of retail brokerage customers who trusted Schmidt to guide their financial decisions as they approached retirement. From at least 2003 through 2017, Schmidt betrayed his customers’ trust byperpetrating a classic fraudulent scheme: he robbed Peter to pay Paul. Schmidt – acting without customer authorization – repeatedly sold securities belonging to some of his brokerage customers and secretly transferred the sale proceeds to cover shortfalls in the accounts of other customers. In total, between 2003 and October 2017, Schmidt misappropriated over $1.16 million from accounts belonging to seven customers (the “Misappropriation Customers”) and transferred that cash to at least ten other customers whose accounts were experiencing shortfalls (the “Shortfall Customers”).

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