The Denver Post (8/15/12) reports that Clinton D. Fraley was accused of accessing his investors' mutual fund accounts without their approval and forged signatures on checks. He then allegedly used money for personal use. Fraley reportedly lost his stockbroker license in 2011.
"The complaint alleges that [Fraley] solicited hundreds of thousands of dollars from Colorado investors, promising the investors that their money would be invested in a 'well balanced portfolio of investments' consisting of Roth IRAs, traditional investments such as stocks and bonds, mutual funds and non-qualified investments," the Colorado Division of Securities stated in its announcement (8/15/12).
According to the lawsuit, Fraley solicited at least $500,000 from two Colorado investors. Both investors were firefighters and friends of Fraley, who is a former firefighter. One of the investors, referred to in the complaint as JD, was sent a letter by Mass Mutual, a former employer of Fraley, on June 28, 2012. That letter had four checks attached, including two written out to Fraley's company Wealth by Design, one for $60,000 and another for $281,000. JD alleges that the signatures on the checks are not hers.
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"Fraley failed to disclose material facts to investors, such as that he would use invested funds for personal use, nor did he obtain their authorization to use investor funds to purchase a private residence," the lawsuit alleges. "Further, despite not being licensed as a sales representative, Fraley accessed and liquidated securities positions on behalf of the investors via forged checks, converting investor funds to personal use."
The lawsuit was filed by Colorado Securities Commissioner Fred Joseph against both Clinton D. Fraley and his company, Wealth by Design Inc. An investigation into Fraley's activities is ongoing. Meanwhile, a judge has issued a temporary restraining order and asset freeze.