brokerwatch

James Couture | Private Wealth Management – Legacy Financial – LPL Financial

According to FINRA’s BrokerCheck, James Couture has been the subject of 4 disclosures:

• June 2021: Civil, initiated by the United States Securities and Exchange Commission. Allegations: “The Securities and Exchange Commission (the “Commission”), for its Complaint against James K. Couture, alleges that, as an investment adviser, he violated his fiduciary duty to his clients by engaging in a deceptive scheme to misappropriate approximately $2.9 million from them. Couture carried out his scheme by fraudulently prompting his clients to sell portions of their securities holdings in order to fund large money transfers to an entity that, unbeknownst to his clients, he owned and controlled. For each transaction, Couture obtained client authorization under a false pretense that the proceeds would be reinvested for the clients’ financial benefit. In reality, Couture’s intent and purpose in arranging these securities transactions was to divert the sale proceeds for his own use and benefit. And, once Couture used the fraudulently obtained authorizations to secure the sale of client securities and transfers of the proceeds to his exclusive control, Couture proceeded to spend the money for his own benefit. In furtherance of his scheme, Couture lulled clients into believing that their sale proceeds had been actually reinvested by providing them with fabricated account systems and account holding reviews, which he provided to his clients through electronic email or by U.S. Mail. The fabricated documents reflected securities transactions that never happened, current investments that did not exist, and earnings that the clients never received, all to create the false appearance that Couture had reinvested his clients’ money. Further, when clients requested withdrawals, Couture fraudulently took assets from other advisory clients to cover those withdrawals. To hide this later misappropriation, Couture transferred client money through a web of third-party administrator accounts to disguise that he was misappropriating money from one client to replace funds he had previously stolen from another. As a result of his conduct, Couture violated, and unless restrained and enjoined will continue to violate Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.”
• October 2020: Regulatory, initiated by FINRA. Allegations include: “The findings stated that Couture’s firm submitted a Form U5 terminating his registration and alleging that he altered identifying information, account balances and distributions in customer account statements; maintained comingled customer funds; and used an unapproved email address. Initially FINRA received a response to its requests from Couture, however his production was substantially incomplete. Subsequently, Couture decided to cease complying with FINRA’s requests.”
• October 2020: Customer Dispute. Allegation: misrepresentation.
• June 2020: Employment Separation After Allegations. Firm name: LPL Financial LLC. Allegations: “Altered identifying information, account balances and distributions in customer account statement; maintained comingled customer funds; use of an unapproved email address.”

Prior to LPL Financial, James Couture was registered with Lincoln Financial Securities Corporation, New England Securities, and Morgan Stanley DW Inc.

If you invested with James Couture of The Private Wealth Management Group, Legacy Financial Group and LPL Financial, contact Peiffer Wolf immediately for a FREE Consultation.

To review James Couture’s BrokerCheck report, click here:

https://brokercheck.finra.org/individual/summary/4406284

*BrokerCheck is run by the Financial Industry Regulatory Authority, Inc. (FINRA)

James Couture |  FBI and SEC Investigations

On June 1, the Securities and Exchange Commission charged James Couture with defrauding clients:

The SEC’s complaint, filed in federal court in Massachusetts, alleges that from approximately 2009 to December 2019, James K. Couture, while operating an investment advisory and brokerage business, fraudulently prompted his advisory clients to sell portions of their securities holdings in order to fund large money transfers to an entity that, unbeknownst to his clients, Couture owned and controlled. According to the complaint, for each transaction, Couture obtained client authorization by falsely claiming that the proceeds would be reinvested for the clients’ financial benefit. In reality, Couture’s alleged purpose in arranging these transactions was to divert the sale proceeds for his own benefit.

 

The complaint alleges that, in furtherance of his scheme, Couture lulled clients into believing that their sale proceeds had been reinvested by providing them with fabricated account statements. When clients requested withdrawals, Couture allegedly took assets from his other advisory clients to cover those withdrawals. According to the complaint, in order to hide this misappropriation, Couture transferred client money through a web of third-party accounts to disguise that he was misappropriating money from one client to replace funds he had previously stolen from another.

On June 2, 2021, the U. S. Attorney’s Office, District of Massachusetts, also charged James Couture with fraud:

As alleged in charging documents, from approximately 2009 to 2020, Couture misappropriated approximately $2.8 million from his clients by transferring funds out of his clients’ accounts for investment in fictitious funds and using the money for other purposes, including to purchase a client list from another investment advisor. Couture also allegedly used client money to pay fake investment returns to other clients he had defrauded. For example, in or about June 2016, Couture allegedly liquidated one client’s variable annuities to fund withdrawals by another client. It is also alleged that in December 2019 and January 2020, Couture sold one client’s mutual funds and raided a 401(k) plan he managed to fund withdrawals by another client, whose assets Couture purported were held in a mutual fund account, when in fact neither the funds nor the account actually existed.

According to the Telegram & Gazette, James Couture is facing “both civil and criminal actions in federal court”:

The FBI alleges in court documents that Couture perpetrated the fraud through an investment advisory services firm he created, The Private Wealth Management Group LLC, as well as a shell company he created, Legacy Financial Group LLC.  […]

 

The FBI wrote in court documents that Couture had clients of The Private Wealth Management Group transfer assets to Legacy, “but he did not tell them that Legacy was only a shell company that he controlled and did not hold or offer bona fide investment products.” […]

Financial advisors (brokers) have a legal obligation and regulatory obligation to recommend only suitable investments that are appropriate for their individual clients. Their broker-dealer (employing brokerage firm) has a legal obligation and regulatory obligation to supervise the financial advisor’s sales practices and dealings with clients. To the extent that any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

Based on our experience, we believe that there are more investors who have been the victims of James Couture’s alleged broker misconduct and investment fraud. If you invested with James Couture of The Private Wealth Management Group, you should  contact Peiffer Wolf immediately for a FREE Consultation.