Former Manhattan Financial Advisor Elias Herbert Hafen Pleads Guilty to Investment Fraud
On Wednesday, September 4, 2019, the U.S. Attorney’s Office for the Southern District of New York announced former Manhattan Financial Advisor Elias Herbert Hafen pled guilty to defrauding clients out of hundreds of thousands of dollars in a fraudulent investment scheme.
Hafen (CRD# 867068) had been registered with Wells Fargo Clearing Services, LLC in New York from March 2018 to November 2018, but was with Morgan Stanley when the alleged misconduct took place. As FINRA’s BrokerCheck indicates, Hafen was discharged from Wells Fargo for allegedly admitting to entering into financial arrangements with clients not approved by the firm.
Hafen additionally has one settled customer dispute from September 2018 alleging misappropriation of client funds between July 2011 and January 2018. Hafen was permanently barred from the securities industry on October 29, 2018.
Federal Indictment Alleges Fake Investment Scheme
According to the federal indictment, Hafen was charged with operating a scheme to defraud at least 11 of his financial advisory clients from 2013 to 2018. During that time, Hagen misled clients into believing he had access to a high-yield investment fund with guaranteed returns. Following Hafen’s advice, clients transferred hundreds of thousands of dollars directly to Hafen’s personal bank account to invest in the purported fund. Hafen furthered his scheme by also creating fictitious “Investor’s Statements” that contained the name of a non-existent investment company and which purportedly detailed clients’ investment status.
In reality, no investment fund existed, and there was no status for clients’ investments. Hafen used clients’ funds to furnish a lavish lifestyle, including an expensive collection of fine art, and custom men’s accessories.
Hafen is scheduled for sentencing before a federal judge in January 2020.
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