If You Think Something Sounds Fishy, Trust Your Gut

Several years later, Leo T. Buggy, working at his AXA Equitable office in Rock Springs, convinced a number of clients to cash out of investments – incurring early withdrawal penalties and other fees – to put that money in investments that he told them were safer and produced higher yields. He produced statements that purported to be from AXA detailing the fake accounts.
In reality, he had transferred up to $1.2 million in client funds to his personal bank accounts.

In one case, Buggy emptied a client’s account – insurance money the victim received after her husband’s death in a motorcycle accident; she’d relied on that to supplement her Social Security income.

In August 2007, Novotny was sentenced to 38 months in federal prison after pleading guilty to mail fraud and money laundering charges. He was also ordered to pay his victim $330,500.

In October 2009, Buggy was sentenced to 46 months in federal prison after pleading guilty to mail fraud, wire fraud and money laundering charges. He also was ordered to reimburse $1.2 million to AXA; the company had reimbursed his clients.

The Wyoming Secretary of State, among other duties, serves as Wyoming’s securities commissioner. The Compliance Division oversees the state’s securities industry and is responsible for registering investments offered or sold in Wyoming as well as registering and overseeing the firms and brokers working for those firms.

An estimated 83,000 securities agents are registered in Wyoming, giving the Secretary of State’s Office access to background information on all of them, including criminal history, customer complaints, regulatory actions taken as well as any other disclosures.

The Secretary of State has the authority to investigate violations of the state Securities Act and has jurisdiction over fraudulent activities in these areas. The division can file administrative actions – to revoke licenses, for example – and to refer criminal matters to local, state or federal authorities.

Fraud investigators often find that victims are embarrassed or feel stupid and as a result they don’t report crimes. Karen Wheeler, director of the Secretary of State’s Compliance Division said people should never feel that way. While recovering lost money isn’t always possible, that will never happen if fraud isn’t reported.

If you suspect something is fishy about a broker’s promise or an investment opportunity, all it takes is a quick phone call to verify that the product is registered to be sold in Wyoming and that the broker is in good standing. Contact the Wyoming Secretary of State’s Compliance Division at 307-777-7370.

Find more information, including tips to avoid risky investments.