The Securities and Exchange Commission (SEC) has filed charges against Joseph Michael “Mike” Todd and his companies, Todd Financial Services, LLC (TFS), and TFS Insurance Services LLC (TFS Insurance), for engaging in fraudulent activities that victimized at least 20 brokerage customers, resulting in the misappropriation of a minimum of $3 million.
According to the complaint, Todd, who worked as a registered representative and investment adviser representative at a dual-registered broker-dealer and investment adviser, employed deceptive tactics to obtain funds from investors. He advised his brokerage customers to write checks payable to TFS, TFS Insurance, or himself, falsely promising to invest the funds in various securities. Instead, Todd diverted the money for personal use, spending it on real estate, boating, hunting, casinos, and adult entertainment. To cover up his scheme, Todd presented forged account statements or portfolio holdings statements to his defrauded customers, showing fake entries indicating their investments in the promised products. Shockingly, many of Todd’s victims were seniors and disabled individuals. Additionally, he resorted to Ponzi-like payments to one customer, using funds from other customers’ accounts, deceitfully claiming them as interest payments or regular distributions from an investment.
The SEC’s complaint, filed in the Middle District of Florida, accuses Todd and TFS of violating the antifraud provisions of the Securities Act of 1933, specifically Section 17(a). Todd, TFS, and TFS Insurance are also charged with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The SEC is seeking disgorgement, civil penalties, permanent injunctions, and conduct-based injunctions against the defendants, with a permanent officer-and-director bar for Todd.
In a bid to settle the charges, Todd, TFS, and TFS Insurance have agreed to injunctive relief and the officer-and-director bar for Todd without admitting or denying the SEC’s allegations. Additionally, they will pay disgorgement, prejudgment interest, and civil penalties, with the specific amounts to be determined by the Court at a later date upon an SEC motion.
The SEC’s investigation, still ongoing, involved Caryn Trombino, Larry Brannon, Neal Jacobson, and Ellen Lynch, under the supervision of Jeffrey Shank of the Chicago Regional Office. The litigation will be led by Daniel Hayes.
The SEC extends its appreciation to the Financial Industry Regulatory Authority (FINRA) for their assistance in this matter.