Ex-broker charged with fraud blames sloppy paperwork

SCRANTON, Pa. — A former Pennsylvania financial planner who was ordered to pay millions of dollars in damages to customers he allegedly tricked into high-risk investments took the stand at his criminal fraud trial Monday and blamed some of his woes on sloppy paperwork and incompetent or underhanded brokerage companies.

Anthony Diaz, who was kicked out of the securities industry in 2015 over persistent customer complaints and rules infractions, is battling an 11-count indictment alleging wire and mail fraud. Prosecutors say he told customers he was putting their money in safe investments with guaranteed profits when, in reality, he invested it in high-risk “alternative investments” for which they weren’t qualified.

Testifying in his own defence, Diaz said the investments he sold were vetted and approved by the brokerages he worked with. And he insisted he fully explained the risks to his clients.

Once regarded as one of the nation’s top brokers, Diaz earned millions of dollars over a 15-year career by pushing high-fee, high-risk “alternative investments.” Prosecutors said he had unsuspecting clients sign blank documents, then falsified their net worth, income, investment experience and risk tolerance to make it appear they met the suitability requirements of the products.

Diaz chalked it up to paperwork errors.

“I’m terrible at paperwork,” he testified. He said he hired an operations manager to handle the administrative side of the business so that he could be freed up to do what he did best — sell investments.

When Wall Street’s self-regulator, the Financial Industry Regulatory Authority, eventually filed a wide-ranging complaint against him, Diaz said he wanted to fight the allegations. But he said he took his parent’s advice and settled, agreeing to a permanent ban because he planned to exit the business anyway.

In retrospect, Diaz said, it was a mistake.

“I should’ve fought it. I think if I would’ve fought the accusations that I might not be here today. … I had all my ducks in a row,” he told jurors. Diaz noted his settlement did not require him to admit wrongdoing.

Diaz was fired from five brokerages. Trying to explain why, he said he affiliated with companies that either couldn’t handle the volume of business he was generating or that unfairly threw him under the bus when questions were raised about unauthorized trading. At least one brokerage stole his clients after terminating him, he said.

“I was used to getting kicked around,” Diaz said.

Prosecutors rested their case Monday morning after calling 12 of Diaz’s former clients.

One of them, Joseph McCloskey, testified that he invested his entire nest egg of $1.5 million with Diaz — and has since lost about $800,000 of it.

McCloskey said Diaz promised to put him into safe investments with guaranteed returns, including an energy exploration company and a real estate investment trust. Diaz, he said, did not explain to him that the investments were speculative and that he could lose his principal.

McCloskey testified that he signed a series of blank forms at Diaz’s behest. Diaz, unbeknownst to him, vastly inflated his worth to qualify him for the investments, he said.

McCloskey acknowledged he didn’t read the investment documents — whose fine print spelled out the risk — because “I trusted Anthony Diaz.”

The Financial Industry Regulatory Authority has already awarded some $4 million in damages to 19 former clients, but agency officials said Diaz hasn’t paid up.

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