Investment Center Stockbroker Criminally Charged With Fraud
Leon William Vaccarelli of Waterbury Connecticut a stockbroker formerly registered with The Investment Center has been indicted for wire fraud and mail fraud based on allegations that he engaged in a scheme which victimized elderly customers. United States v. Leon Vaccarelli No. 18-cr-g2-SRU (D. Conn May 2, 2018).
On May 29, 2019, the Securities and Exchange Commission charged Vaccarelli with fraudulently persuading several customers to invest with him and then spending their money on his own living and business expenses was found guilty by a federal jury in a parallel criminal case
In a parallel matter, Vaccarelli was charged by Securities and Exchange Commission (SEC) in a Complaint alleging that he engaged in securities fraud. Securities and Exchange Commission v. Leon Vaccarelli Case 3:17-cv-01471 (Aug. 31, 2017).
According to the Complaint brought by SEC, Vaccarelli was sole member of a Connecticut-based LLC, LWLVACC, LLC, and through that company, he reportedly misappropriated funds he obtained from customers. Apparently, funds were also stolen by Vaccarelli from a trust under which Vaccarelli was fiduciary, during the time Vaccarelli was an investment advisory representative with IC Advisory Services Inc. and a broker with The Investment Center.
The Complaint alleged that a number of brokerage customers were persuaded by Vaccarelli to provide him funds to buy customers’ investments including private loans. Vaccarelli allegedly told some investors that their funds would be allocated within The Investment Center brokerage accounts, while telling other customers that their Investment Center account proceeds would be utilized to purchase the investments that Vaccarelli solicited. SEC also indicated that customers were led by Vaccarelli to liquidate their existing pensions and annuities to buy notes and other investments Vaccarelli offered.
The Complaint stated that Vaccarelli had not invested the customers’ funds as he claimed he would. Rather, customers’ funds were allegedly placed by Vaccarelli into his own bank accounts. Supposedly, Vaccarelli then used customers’ funds to pay his living expenses and pay prior investors. SEC stated that from 2012 to 2017, more than $1,000,000.00 were taken by Vaccarelli from nine customers. The Complaint further alleged that a total of $450,000.00 worth of securities had been sold by Vaccarelli from a trust that was set up for the maintenance and welfare of a beneficiary. Apparently, a portion of the money withdrawn by him was used to pay down his mortgage and address his personal expenses.
SEC indicated that once regulators started investigating him, he tried to get at least one customer to agree not to furnish any information to SEC or Financial Industry Regulatory Authority (FINRA) in regard to his purportedly fraudulent activities.
SEC alleged Vaccarelli’s conduct was violative of Securities Exchange Act of 1934 Section 10(b); SEC Rules 21F-17(a) and 10b-5; and Securities Act of 1933 Section 17(a). Evidently, on August 31, 2017, SEC obtained an asset freeze and temporary restraining order against Vaccarelli. Ultimately, SEC seeks, inter alia, for Vaccarelli to be disgorged of his illicit gains and barred from the securities industry.
Vaccarelli has been fined $7,500.00 and suspended from associating with any FINRA member in any capacity based upon consenting to findings that he effected unauthorized trades in customer accounts during the time he was associated with The Investment Center. Letter of Acceptance Waiver and Consent No. 2014042302001 (Nov. 24, 2015). According to the AWC, Vaccarelli neither had written permission from the firm nor the customers to place trades in their accounts on a discretionary basis. Moreover, Vaccarelli reportedly lied about his activities; he falsely claimed to the firm that he had not exercised discretion in customer accounts. FINRA found Vaccarelli’s conduct violative of FINRA Rule 2010 and NASD Rule 2510(b).
FINRA Public Disclosure confirms that Vaccarelli has been identified in nine customer initiated investment related disputes pertaining to accusations of his violative conduct during the time that he was associated with The Investment Center and American Express Financial Advisors. In particular, a customer filed an investment related complaint regarding Vaccarelli’s conduct where the customer sought $7,800.00 in damages based upon allegations that while Vaccarelli was associated with Ameriprise Financial Services, the customer’s variable annuity account had been negligently managed. Thereafter, a customer filed an investment related complaint involving Vaccarelli’s activities in which the customer requested $25,000.00 in damages founded on accusations that misrepresentations had been made to the customer concerning a real estate investment trust, inducing the customer to purchase the investment.
On September 11, 2017, another customer filed an investment related complaint concerning Vaccarelli’s activities in which the customer requested more than $5,000.00 in estimated damages based upon accusations that Vaccarelli caused the customer to suffer from unwarranted real estate investment trust losses. Between October 6, 2017 and October 30, 2017, four more customers filed investment related complaints regarding Vaccarelli’s conduct where the customers collectively requested $295,768.00 in damages founded on allegations including civil theft and conversion of customer funds.
Another customer filed an investment related arbitration claim regarding Vaccarelli’s activities in which the customer sought $300,000.00 in damages supported by accusations that Vaccarelli misappropriated funds belonging to the customer. FINRA Arbitration No. 18-02079 (June 8, 2018). Moreover, a customer initiated investment related arbitration claim concerning Vaccarelli’s conduct was settled for $80,000.00 in damages supported by allegations that Vaccarelli converted the customer’s funds. FINRA Arbitration No. 17-02101 (July 27, 2018).
Vaccarelli was discharged from The Investment Center Inc. on July 19, 2017 based upon allegations that Vaccarelli violated the firm’s policies by obstructing the firm’s investigation into his activities.