Claus Foerster, an ex-broker from South Carolina, was indicted by a grand jury for bilking customers out of $2.8 million during a fourteen-year span. Foerster operated his scheme from 2000 to 2014 while working as a financial advisor at Smith Barney & Co., Morgan Keegan & Co. and Raymond James Financial Inc., according to an indictment in the U.S. District Court in Spartanburg, South Carolina.

The allegations stem from FINRA’s 2014 decision to bar Foerster from the securities industry for operating a Ponzi scheme. Foerster would tell customers that he had an “excellent investment” for them at SG Investments, a fictional company that Foerster claimed would provide higher returns than the brokerage firms that employed him, according to the indictment. After clients agreed to the investment, Foerster then told them to take out money from their brokerage accounts and put it into their personal banking accounts. Deposits were then transferred to him in the form of checks.

Foerster kept the $2.8 million for his personal use, but on occasion would give “bonus earnings statements” to hide his operation and make his customers believe that the funds were invested and creating profits, according to the indictment. The indictment also stated that the broker started defrauding clients at Smith Barney & Co. from 1997 to 2008 and then at Morgan Keegan & Co. Inc. until 2012 when the firm was bought by Raymond James.

“Raymond James terminated the employment of financial adviser Claus Foerster in 2014 after he admitted to misappropriating funds from a handful of clients through a phantom private investment fund he created outside of Raymond James and before he joined the firm,” said Anthea Penrose, a spokeswoman for the St. Petersburg, Florida-based broker-dealer. “We have since made complete restitution to all involved clients.”

If you or someone you know has lost money as a result of a broker’s wrongdoing, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.