From Brokerage House to the Big House

Dennis Herula, the 59-year-old former Raymond James Financial Services broker who lavished himself with homes and other gifts using millions of dollars stolen from clients, was sentenced to 16 years in federal prison on Friday.

Dennis Herula, the 59-year-old former Raymond James Financial Services broker who lavished himself with homes and other gifts using millions of dollars stolen from clients, was sentenced to 16 years in federal prison on Friday.

“My greed and total disregard put my career into a new league—that of a thief,” said Herula in a Denver federal court before being sentenced by U.S. District Judge Robert Blackburn. The judge concluded that 16 years was appropriate, saying Herula’s stealing would not have stopped if it weren’t for his capture in Boston in May 2004, where he’d been living under an assumed name.

Herula pleaded guilty in November 2004 to conducting a fraudulent scheme that promised big returns to investors with “no risk.” Along with his wife, Mary Lee Capalbo, and the son of the former co-owner of the New England Patriots, Charles Sullivan, he solicited funds for a bogus venture called Brite Business, raising $44.5 million between 1999 and 2000, which he then kept in a RJFS brokerage account.

Herula used much of the money to buy expensive homes and other gifts for himself and his wife, including a $200,000 Bentley and a 13.5-carat diamond ring.

In a rare move, the SEC filed a civil-fraud case in September 2004 against not only Herula’s supervisors, but also RJFS itself. J. Stephen Putnam, former president and COO, and David Ullom, the former branch manager at the Cranston, R.I., office, were charged with failure to supervise. The SEC complaint alleges the firm knew of the suspicious nature of Herula’s activities in mid-2000 but didn’t fire him until December, thus allowing him to continue the fraud.

RJFS refused to settle with the SEC and denies all charges. The firm’s trial in front of an administrative law judge began Jan. 31 in Boston.

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