SEC Bars Mutual of Omaha Stockbroker For Fraud
Edward Earl Matthes (also known as Ed Matthes) of Oconomowoc Wisconsin a stockbroker associated with Mutual of Omaha Investor Services Inc. has been barred by Securities and Exchange Commission (SEC) from being a stockbroker or investment advisor or otherwise associating with securities broker dealers or investment advisories according to an Order based on allegations of Matthes defrauding customers and misappropriating their funds. In the Matter of Edward E. Matthes Administrative Proceeding File No. 3-19686 (Feb. 3, 2020).
SEC obtained a judgement against Matthes which permanently enjoined the stockbroker from violating Securities Exchange Act of 1934 Section 10(b) and SEC Rule 10b-5 as well as Securities Act of 1933 Section 17(a) and Investment Advisers Act of 1940 Sections 206(1) and 206(2). SEC v. Edward E. Matthes Civil Action No. 2:20-cv-00125-LA (E.D. Wis. Jan. 30, 2020).
Matthes was charged by SEC in a Complaint alleging that twenty-six of the stockbroker’s senior retail customers had been defrauded out of $2,400,000.00 from April of 2013 to March of 2019.
SEC alleged that Matthes’ customers had been lied to and were persuaded to invest through him because of being falsely assured that their assets would be directed to a safe investment issued by Entity A producing four percent annual returns. The Complaint stated that customers were instructed to hand Matthes the funds to place with Entity A. SEC indicated that the investments in Entity A did not exist contrary to what Matthes led his customers to believe.
The Complaint also alleged that customers’ funds were not used as represented by the stockbroker. Matthes allegedly directed customers’ funds to his own bank account and then furnished fake account statements to customers to hide his fraud. SEC also alleged that unauthorized sales and withdrawals from customers’ annuities had been effected by Matthes to accumulate $1,000,000.00 of the $2,400,000.00 he stole. The Complaint alleged that the customers’ funds were used by Matthes to fund a lavish lifestyle.
The stockbroker also took funds from newer investors to pay prior investors back much like a Ponzi scheme.
Financial Industry Regulatory Authority (FINRA) Public Disclosure reveals that Matthes has been referenced in fourteen customer initiated investment related disputes concerning accusations of his misconduct while associated with securities broker dealers including Mutual of Omaha Investor Services.
On May 10, 2019, a customer initiated investment related complaint in reference to Matthes’ conduct was resolved for $87,584.95 in damages based upon accusations of the misappropriation of customer funds by Matthes during the time that he was associated with Mutual of Omaha Investor Services. According to the complaint, funds were diverted by the stockbroker to his own personal banking account. Matthes allegedly gave the customer fake account statements to reflect the customer’s investments.
Matthes is also referenced in a customer initiated investment related complaint which was settled on August 12, 2019 for $190,923.34 in damages supported by allegations that the customer’s funds had been misappropriated by Matthes for his own personal benefit while employed by Mutual of Omaha Investor Services Inc. Mutual of Omaha Investor Services discharged Matthes on March 12, 2019 based upon accusations of misappropriation and the use of fictitious statements to conceal his diversion of customer funds.