Pennsylvania financial advisor Douglas Simanski agreed to settle a case against him last week that alleged he defrauded his clients, who believed he was investing their money in “tax free” securities and mining companies.
The settlement is subject to court approval and includes an order from the Securities and Exchange Commission that, when entered, will bar him from the securities industry for the rest of his life. He also pleaded guilty to criminal charges filed in the U.S. Attorney’s Office for the Western District of Pennsylvania.
The SEC complaint, filed in federal court in Johnstown, Penn. charged Simanski with violating antifraud provisions of the federal securities laws. He allegedly raised more than $3.9 million from approximately 27 of his clients and told them he was investing it in “tax free” securities, a rental car company, or one of two coal mining companies he claimed to have a stake in. But instead of investing the money as promised, Simanski largely used the money to pay back other investors and kept some for himself. Most of the clients he defrauded were retired or elderly, according to the SEC.
Among other allegations in the complaint, between at least October 2014 and May 2016, Simanski solicited clients to invest in a fictitious company he referred to as “Payless Rental Car” or “Payless Rent A Car” in one-page notes about investments in the company.