The Securities and Exchange Commission (SEC) barred a Mass.-based investment advisor, formerly affiliated with LPL, that stole more than $2.8 million from clients.
The settlement with the SEC comes nearly three months after James K. Couture pleaded guilty to four counts of wire fraud, four counts of aggravated identity theft, one count of investment advisor fraud and one count of witness tampering in Mass. federal court, according to the Justice Department.
Couture, who lived in Sutton, Mass. is the founder and owner of the Private Wealth Management Group and was a dual registrant with LPL from 2009 to his firing in June 2020, according to the SEC’s settlement order. Couture had multi-year stints with Lincoln Financial Group and New England Securities before joining LPL, according to his BrokerCheck profile.
According to the DOJ, Couture operated as an RIA out of an office in Worcester, investing clients in various insurance products, including annuities, but throughout his time at LPL, he misappropriated funds from clients for his own expenses.
To do so, Couture would advise clients to invest their funds in sub-accounts managed by an unnamed LPL-authorized sub-advisor, and began convincing clients to sell parts of their funds to “Legacy Financial Group,” claiming he’d reinvest them for greater profits. But Couture failed to tell clients he’d formed Legacy Financial in 2009, and neither LPL or the sub-advisor had authorized Couture to use it as a third-party advisor for clients.
By selling other clients’ holdings, he would pay investment returns and other needs; in 2016, Couture liquidated all of a client’s variable annuities to fund a separate client’s withdrawals; in Dec. 2019 and Jan. 2020, Couture paid a previously-defrauded client by selling the mutual funds of other clients. Couture would forge signatures on documents, or get clients to sign documents by lying about how the proceeds of a transaction would benefit them, according to the DOJ.
Couture was charged in June 2021 with wire fraud and aggravated identity theft in Massachusetts federal court. After charges were filed, Couture created fake documents he claimed were for his clients’ accounts and continued to give false information to one of his victims for a further six months, leading the DOJ to add charges of witness tampering against the advisor this past January.
Couture could not be reached for comment, and his most recent attorney is listed as having ended his work with the advisor in January 2022.
Couture’s Private Wealth Management Group was never registered with the commission or with state regulators; while Legacy Financial was formed as an LLC in New Hampshire, the New Hampshire Department of State administratively dissolved it in 2013, according to the SEC. FINRA also barred Couture from the industry in Oct. 2020.
Couture faces decades in prison as a result of his guilty plea in September. The wire fraud charges allow for up to 20 years in prison, as well as three years of supervised releases, while the aggravated identity theft charges range up to two years, the investment advisor fraud charges involve sentences as high as five years, and the witness tampering charges carry a potential sentence of 20 years in prison. Couture’s scheduled to be sentenced early next year.