Former Stifel, Nicolaus & Co. and AXA Advisors broker Kenneth Neely pleaded guilty on Nov. 4 to fraud charges connected to operating a Ponzi scheme in which clients from two brokerages – Stifel, Nicolaus & Co. and AXA Advisors – were lured into investing money in Neely’s St. Louis Investment Club and a non-existent real estate investment trust. Neely allegedly enticed investors – some of whom were church members, family and friends – in Missouri, California and Maryland with promises of “no risk” and profitable rates of return.
According to to a cease and desist order filed by Missouri Secretary of State Robin Carnahan’s Office, Neely began raising money for his scam while working for Stifel, Nicolaus & Co. and AXA Advisors. The scheme, which began in January 2002 and continued until 2009, was kept afloat by Neely allegedly using some of the funds raised from new investors to pay investment returns to other investors. This is the hallmark of a Ponzi scheme.
Stifel Nicolaus and AXA Advisors were not named as respondents in Carnahan’s cease and desist order.
Carnahan’s office initially launched its investigation into Neely after receiving information from one of his former employers, AXA Advisors. On July 29, 2009, Neely was barred by the Financial Industry Regulatory Authority (FINRA) from operating as a broker.
Neely, 56, faces a maximum penalty of 20 years in prison and/or fines up to $250,000, as well as mandatory restitution to his victims, according to the St. Louis Federal Bureau of Investigation. Sentencing is set for January 29, 2010.
Investors who had accounts with Stifel, Nicolaus & Co. or AXA Advisors are encouraged to contact us and tell us your story. You may have a viable claim to recover your losses. Please leave a message in the Comment Box below or on the the Contact Usform.