James Kenneth Couture of Worcester, Massachusetts, a stockbroker formerly registered with LPL Financial LLC, is referenced in a customer initiated investment related written complaint that was settled for $270,179.42 in damages on May 19, 2022, supported by accusations of misappropriation of the customer’s funds by Couture while he was registered with LPL Financial.
On September 8, 2022, Couture entered a plea agreement with the court whereby he
pleaded guilty to criminal charges, including, among others, one count of investment adviser fraud,
in violation of Title 15 United States Code, Sections 80b-6 and 80b-17 before the United States
District Court for the District of Massachusetts, in United States v. James Kenneth Couture, Crim.
No. 21-cr-10172-NMG (D. Mass.).
The indictment to which Couture pled guilty alleged, inter alia, that, from
September 2009 through January 2020, Couture misappropriated approximately $2.9 million from
approximately six investors. As part of a scheme, Couture advised his clients to transfer their
assets to a company called Legacy Financial Group, LLC (“Legacy”) for investment purposes,
without telling the clients that Legacy was a shell company that he controlled and that did not hold
or offer bona fide investment products. Couture did not invest the money his clients transferred to
Legacy, as he promised them he would. Instead, he used his clients’ funds that they transferred to
Legacy for other purposes, including to buy the client list of another investment adviser in or about
October 2013. In order to deceive his clients about the fact that he had stolen their money, Couture
created fake account statements that purported to reflect investments at Legacy in accounts and
investment funds. In fact, those accounts and investments did not exist. As a further part of the
scheme, when Couture’s clients requested withdrawals or transfers from their purported Legacy
accounts, Couture paid them with assets he stole from other clients and disguised the payments as
disbursements from profit-sharing or employee benefit plans held at a third-party benefit company.
FINRA Public Disclosure shows that Couture has been identified in four additional customer initiated investment related disputes regarding allegations of his conduct while employed by LPL Financial LLC. On April 26, 2022, a customer initiated investment related complaint involving Couture’s activities was resolved for $50,000.00 in damages based upon accusations of misappropriation by Couture.
Couture is also the subject of a customer initiated investment related written complaint on October 20, 2020, where the customer sought compensatory damages founded on allegations that Couture made misrepresentations regarding exchange-traded funds and mutual funds between April 21, 2020, and October 20, 2020.
On June 4, 2021, another customer filed an investment related complaint regarding Couture’s conduct in which the customer requested $3,206,760.22 in damages based upon allegation thatthe broker of misappropriated funds from the customer’s account between 2011 and 2016. To conceal the theft, the customer alleges that they were given false statements concerning their investments. The complaint alleges LPL Financial failed to supervise, resulting in the theft of the customer’s assets. The claim also contains allegations of breach of fiduciary duty resulting in damages.
Couture is referenced in a different customer initiated FINRA securities arbitration claim which was settled for $480,000.00 in damages supported by accusations that the customer’s funds were used by Couture to pay another customer when Couture was employed by LPL Financial. FINRA Arbitration No. 21-01476 (October 19, 2021).
Couture has also been barred from associating with any FINRA member in any capacity based on findings that he failed to comply with FINRA investigators during a period that the circumstances of his employment termination at LPL Financial were reviewed. Letter of Acceptance, Waiver, and Consent No. 2020067011901 (October 21, 2020).
According to the AWC, Couture was discharged by LPL Financial on June 16, 2020, based upon allegations of Couture’s altering of customer account statements, use of a private email account, and misuse of customer funds. FINRA sought more information from Couture regarding the accusations made by LPL Financial, so the regulator asked him in June 2020 to provide documents and information. Couture partially complied, but his lawyer later told FINRA that Couture would not comply with the inquiry. As a result, Couture violated Rules 2010 and 8210.
Couture has also been charged by Securities and Exchange Commission with fraud. Securities and Exchange Commission v. James K. Couture, Case No. 1:21-cv-10908. SEC alleges that between 2009 and 2019, a deceptive scheme had been run by Couture, where Couture violated his fiduciary duty to customers. SEC alleges that aproximately $2,900,000.00 had been misappropriated by Couture. According to the SEC Complaint, Couture encouraged investors to sell their existing investments and use the proceeds to fund transfers to entities under Couture’s control and ownership. SEC alleges that Couture gave customers accounts statements that were fabricated and fraudulently made to appear as though the customer’s funds were invested in securities.
The regulator alleges that customers’ funds were used by Couture for his own benefit instead of for investment purposes. When the customers asked for withdrawals, the stockbroker allegedly used other customers’ funds to handle the requests. SEC alleges that Couture violated Securities and Exchange Act of 1934 Section 10(b) and SEC Rule 10b-5, and Investment Advisers Act of 1940 Section 206.
Couture has also been charged in a criminal case brought by US Attorney’s Office. The criminal case alsop alleges that:
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.
