brokerwatch

Who was Stephen Swensen?

Stephen Swensen was a resident of Kaysville, Utah who allegedly operated Crew Capital. According to FINRA BrokerCheck, Swensen was a registered representative with several brokerage firms over the past several years, including:

• Summit Brokerage Services, Inc.
• Allegis Investment Services
• W. Cole Financial, Inc.

Swensen also worked as an investment adviser with Allegis Investment Advisors, LLC, J.W. Cole Advisors, Inc., and Wealth Navigation Advisors. After his father, Phillip Swensen, retired in 2014, Stephen Swensen retained many of his clients.

Before working as an investment advisor and broker, Swensen attended Utah State University and graduated with a degree in Business Administration.

Swensen died in 2022.

How Did the Stephen Swensen Crew Capital Ponzi Scheme Work?

According to the SEC, Swensen began soliciting investments in Crew Capital around July 2011. During pitches to investors, Swensen made several representations about Crew Capital:

• Crew Capital was a safe investment fund
• Crew Capital paid guaranteed minimum returns of 5% annually, and possibly as high as 10%
• Crew Capital could provide retirement income
• Crew Capital was deemed a “Bucket 1” investment by Swensen, which meant that it was the most secure investment in customer portfolios.

Swensen allegedly provided some investors with written materials about the Crew Capital fund which contained falsehoods. For instance, Swensen’s materials stated that Crew Capital was an “actively managed portfolio” that invested in senior floating rate loans and options on the S&P 500 index. In an apparent effort to give credibility to the fund, the written materials stated that PIMCO, which is the Pacific Investment Management Company, served as a subadvisor to Crew Capital.

Swensen used different methods to obtain customer funds for Crew Capital. Investors wrote personal checks and cashier’s checks payable to Crew Capital; others wired funds directly to Crew Capital’s accounts at Wells Fargo Bank; some signed forms authorizing the transfer of funds into Crew Capital’s account directly from the investor’s other investment or retirement accounts.

Where Did the Crew Capital Investor Funds Go?

The SEC alleged that Swensen never invested customer funds in Crew Capital. Instead, Swensen pooled funds in the Crew Capital account at Wells Fargo Bank and used the money as though it were his personal account. According to the SEC complaint, among other things, Swensen used the customer funds to:

• Make Ponzi-type payments of returns to investors
• Pay for his family’s living expenses and fund his lifestyle
• Buy and maintain several airplanes
• Pay for living expenses of at least two mistresses.
• Finance operating expenses of Swensen Capital, LLC and Wingman, LLC.

Summit Brokerage Services, J.W. Cole Financial and Allegis Investment Services Had a Duty to Supervise Stephen Swensen

Brokerage firms are responsible for all of their registered representatives’ business activities whether disclosed or not. Firms like Summit Brokerage Services, J.W. Cole Financial, and Allegis Investment Services, Inc. are required to take affirmative action to monitor and uncover any unapproved outside business activities.

For instance, consider FINRA Rules 3270 (Outside Business Activities of Registered Persons) and 3280 (Private Securities Transactions of an Associated Person). These FINRA Rules require registered representatives like Stephen Swensen to notify their firms in writing of outside business activities so firms can determine whether to limit or allow those activities.

Brokerage firms also have a responsibility to supervise their brokers under FINRA Rule 3130. Specifically, this Rule requires brokerage firms like Summit Brokerage Services, J.W. Cole Financial and Allegis Investment Services to establish and maintain a system to supervise the activities of its associated persons that is reasonably designed to achieve compliance with the applicable securities laws and regulations and FINRA rules.

During the operation of Crew Capital , Summit Brokerage Services, J.W. Cole Financial and Allegis Investment Services employed Stephen Swensen as a registered representative in different time periods from 2010 to 2018. Specifically, Swensen was registered with these firms during the following years:

• W. Cole Financial (May 2018 to July 2018)
• Allegis Investment Services (July 2014 to May 2018)
• Summit Brokerage Services, Inc. (March 2010 to July 2014)

Wealth Navigation Advisors Fired Stephen Swensen

Registered investment advisory firms like Wealth Navigation Advisors, J.W. Cole Advisors and Allegis Investment Advisors have a duty to supervise their registered representatives’ business activities. A firm’s failure to supervise its financial advisors is a basis for liability, including those relating to monitoring and detecting illegal conduct like a Ponzi scheme.

In June 2022, Stephen Swensen was fired from Wealth Navigation Advisors. According to FINRA BrokerCheck for Stephen Swensen, the allegations for his termination from the RIA is “failure to disclose outside business activity.”

If you are a former or current customer of Wealth Navigation Advisors or J.W. Cole Advisors who invested in Crew Capital through Stephen Swensen, please contact our firm at 585-310-5140 to schedule a FREE Case Evaluation.

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