PHOENIX - Attorney General Mark Brnovich announced a State Grand Jury indicted 57 year old former investment advisor Richard Mark Schmerman for his alleged misappropriation of over $800,000 of his client’s funds. Schmerman is facing charges of Fraudulent Schemes & Artifices, Theft, Forgery, & Criminal Impersonation. The Arizona Corporation Commission’s Securities Division investigated and referred the case to the Arizona Attorney General’s Office for prosecution.
“I am pleased with the success from both agencies,” said Arizona Corporation Commission Chairman Tom Forese. “I congratulate our Securities Division investigators and the AZ Attorney General’s Office for working together to investigate and prosecute allegations of unscrupulous business practices.”
Schmerman is a former registered securities salesman and investment advisor representative operating under Diversified Financial in Arizona. Schmerman allegedly used client investment funds to pay personal expenses including a single payment of over $400,000 to a civil judgment issued against him. According to the indictment, Schmerman impersonated some of his clients to gain access to their investment accounts after his access had been terminated due to allegations he had co-mingled client and personal funds.
In one case, Schmerman is accused of amending a Trust for a deceased client for whom he was the acting trustee. He allegedly removed the 22 original beneficiaries, which were family members and charities, and made himself the sole beneficiary.
In 2014, the Arizona Corporation Commission revoked Schmerman’s license and ordered administrative penalties in the amount of $200,000 and restitution in the amount of $3,009,173.
Assistant Attorney General Adam Schwartz is prosecuting this case.
All Defendants are presumed innocent until proven guilty in a court of law.
Full copy of Schmerman's indictment.