Seattle Investment Advisor Charged with Secretly Diverting Client Funds
in $46M Investment Fraud Scheme
Mark F. Spangler, a longtime Seattle-area financial advisor, has been charged
with diverting $46 million in client funds from client accounts to two
risky start-up companies, which he co-founded. He faces 23 criminal counts
of wire fraud, money laundering, and investment advisor fraud, according
to The U.S. Attorney’s Office for the Western District of Washington.
According to the indictment, Spangler told his clients that their funds
would be conservatively invested in publicly traded companies and bonds.
Instead, he allegedly took the money and invested the funds in his risky
ventures. He also allegedly kept this information from clients and misled
them about the status of their accounts by issuing statements that falsely
described both their investments and the status of their accounts.
When investors eventually wanted to liquidate their accounts, they allegedly
were unable to do so because of a lack of profit. One of the companies
in which Spangler invested his clients’ funds is now bankrupt.
In addition to the criminal charges filed against him last week, Spangler
faces an SEC lawsuit. The SEC Complaint was filed on May 17 and accuses
Spangler of similar charges. According to the SEC’s complaint, beginning
in approximately 2003, Spangler and his advisory firm, The Spangler Group
(TSG), began diverting the majority of their clients’ money into
two private technology companies created by Spangler.
This allegedly was done without any notification to Spangler and TSG’s
investors. Additionally, at least one of the companies to which clients’
funds were diverted had an 11-year history of poor performance and net
losses. Though it allegedly received nearly $42 million from Spangler’s
clients, the company generated less than $100,000 in revenue.
“Spangler assured his clients he was investing them in publicly-traded
equities and bonds, not risky start-ups in which he had a personal interest,”
said Marc Fagel, Director of the SEC’s San Francisco Regional Office.
“For an investment adviser to put his self-interest above the best
interests of his clients is a disturbing abuse of trust.”