Isabella fraudulently induced customers, most of whom were retired or nearing retirement, to entrust him with their retirement savings and purchase securities from him by promising that he could achieve sustained annual rates of return of at least 10 percent each and every year, which would allow for consistent annual withdrawal, ranging from 7 percent to 13.5 percent fromtheir investment portfolios without depletion of principal. Many of the customers relied on Isabella’s fraudulent representations when determining to invest their retirement funds with him, and based their decision to retire sooner than they had otherwise planned, at least in part, upon the representation that they would receive enough monthly income from their retirement accounts to live on for the rest of their lives.
Isabella made unsuitable investment recommendations and effected transactions in customers’ accounts without having reasonable grounds for believing that the transactions were suitable for the customers in view of the over-concentration in equities, the related fees incurred, and in light of the customers’ financial situations, investment objectives and needs. Isabella’s promised returns and withdrawal rates proved to be unsustainable, resulting in the depletion of the customers’ retirement savings and forcing some to return to employment. Isabella falsified records maintained by his member firm concerning his customers’ financial situations and goals, and as a result, the customers did not receive the firm’s promised benefit of having an investment manager selected based on their individual needs and financial situations.
Isabella inappropriately obtained confidential contact and employment information about a company’s employees, without their knowledge, authorization or consent, from personnel in the company’s human resources and other departments, and rewarded the contacts for their assistance with gifts.
In addition, Isabella used a false professional designation on correspondence with customers.
Isabella provided false testimony during a FINRA on-the-record interview.
In connection with the sale of an annuity contract, Rutherford misrepresented to a customer that he would receive a higher return rate than what the terms of the policy offered. Rutherford provided the customer with falsified annual account statements and an altered annuity contract that reflected a higher return rate, when in fact the customer was receiving a lower rate of return. Rutherford falsified an annual account statement by increasing the account balance by over $5,000 in order to mislead the customer into believing that he received additional earnings as a result of the higher rate of return, and deposited over $5,000 of her own personal funds into the customer’s account to compensate him for the disparity in return rates.
After agreeing to reimburse another customer for any early withdrawal penalties in connection with transferring money to his annuity, Rutherford falsified an annuity confirmation statement wherein the account balance was increased to cover a surrender charge that had not been credited after the customer complained that he was charged a penalty for early withdrawal.