Edward Earl Matthes of Milwaukee Wisconsin a stockbroker formerly registered with Mutual of Omaha Investor Services has received a 63-month jail sentence based on him pleading guilty to violating federal securities laws as 27 victims had been defrauded in his $2,600,000.00 investment scheme. United States v. Edward E. Matthes 20-cr-0220-bhl (E.D. Wis. May 20, 2021).
According to the Department of Justice (DOJ), between April of 2013 and March of 2019, members of Matthes’ community in Oconomowoc were solicited by him for investments in Mutual of Omaha accounts. Investors were led to believe that they would generate greater performance through Matthes’ approach. But Matthes misappropriated $2,600,000.00 of their funds. The money went into an account under Matthes’ control for his own use.
DOJ indicated that investors were unknowing of the scheme at first because of Matthes providing them quarterly statements which showed their accounts values. Those earning statements Matthes provided to customers were fake. The accounts mentioned in those statements were fake.
In a parallel matter, SEC obtained a judgment against Matthes on January 30, 2020 which permanently enjoined him from violating Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, Securities Act of 1933 Section 17(a), and Investment Advisers Act of 1940 Sections 206(1) and 206(2). SEC v. Edward E. Matthes Civil Action No. 2:20-cv-00125-LA.
SEC’s Complaint alleged that customers of Matthes were told they would be paid a minimum of four percent annually through a guaranteed yield. The regulator alleged that the investments did not exist. SEC indicated that part of the funds were misappropriated by Matthes through his unauthorized withdrawals and sales from customers’ variable annuities. The Complaint alleges that the stockbroker used customers’ funds for luxurious items, car payments, renovation expenses and other personal expenses. The regulator stated that the stockbroker made Ponzi like payments to customers to conceal his scheme.
Matthes has also been barred by SEC from being a stockbroker or investment adviser representative according to an Order based on accusations of Matthes’ fraud. In the Matter of Edward E. Matthes Administrative Proceeding File No. 3-19686 (Feb. 3, 2020). The stockbroker has also been barred by Financial Industry Regulatory Authority (FINRA) from associating with any FINRA member in any capacity based upon findings that he obstructed the regulator’s investigation into allegations of his fraudulent actions. Matthes violated FINRA Rules 2010 and 8210.
FINRA Public Disclosure shows that Matthes has been identified in 15 customer initiated investment related disputes containing accusations of his wrongdoing during the time that he was registered with securities broker dealers including Thrivent Investment Management and Mutual of Omaha. On August 5, 2019, a customer initiated investment related complaint regarding Matthes’ conduct was resolved for $314,823.87 in damages founded on allegations of funds being misappropriated by Matthes during the time that he was associated with Mutual of Omaha. According to the complaint, fake statements were provided to the customer from Matthes.
Matthes is referenced in a customer initiated investment related written complaint which was settled for $190,923.34 on August 12, 2019 supported by accusations of the customer’s funds being misused by Matthes for his own personal benefit while registered with Mutual of Omaha.
On October 14, 2019, another customer initiated investment related complaint involving Matthes’ activities was resolved for $93,333.53 in damages based upon allegations that the customer’s funds were not invested but instead placed into Matthes’ bank account. The stockbroker is also the subject of a customer initiated investment related written complaint which was settled for $569,549.16 on May 7, 2020 founded on accusations of Matthes’ misappropriation of the customer’s funds and his submission of fictitious statements to them.