A former chief compliance officer faces criminal and civil charges for allegedly misappropriating approximately $500,000 in funds from client accounts, including those belonging to elderly and deceased individuals.
Jennifer Campbell, who worked as the office manager and CCO at an unnamed investment adviser in Buffalo, N.Y., is accused of misusing her access to client accounts to modify account settings, allowing her to “misappropriate funds from client accounts through fraudulent checks and wire transfers,” the Securities and Exchange Commission (SEC) said in a litigation release Thursday charging Campbell with violations of multiple securities laws.
In a parallel action brought by the U.S. Attorney’s Office for the Western District of New York, Campbell faces 23 counts of wire fraud and aggravated identity theft.
Campbell joined the unnamed firm in March 2017 as office manager and was named CCO in September 2018, according to the SEC. Her alleged misconduct occurred beginning in February 2019 until she was terminated for cause in May 2021.
Campbell allegedly misappropriated the funds from seven different client accounts. To cover her tracks, she created fake documents, hacked into her colleagues’ email accounts, and used voice-altering software to impersonate her colleague on the phone, according to the SEC’s complaint. She also allegedly executed unauthorized securities transactions to generate cash she then misappropriated.
Additionally, Campbell “wrote checks from client accounts, forging signatures of either the client or a principal at the firm, and then deposited the checks into her own personal account,” according to a Department of Justice (DOJ) press release.
In one example cited in the DOJ’s indictment, she sent a victim a falsified account statement showing a balance of approximately $148,000 when the account had a balance of around $90.
Campbell’s alleged scheme was uncovered in April 2021, when she began concealing her actions by intercepting emails from a broker-dealer to one of her firm’s principals questioning unusual transactions, according to the SEC.
An anti-money laundering officer from the broker-dealer reached out by phone, but Campbell intercepted the call, according to the complaint, and used voice-altering software to impersonate the investment adviser’s principal.
A day later, the broker-dealer sent an email and letter terminating its service agreement with the investment adviser, but again Campbell intercepted these communications, the SEC stated.
Nearly a week later, the investment adviser discovered the termination letter and confronted Campbell, who admitted to certain aspects of her misconduct, according to the complaint.
The SEC’s complaint seeks permanent injunctive relief, disgorgement plus prejudgment interest, and civil penalties. The DOJ’s charges carry a minimum penalty of two years in prison, a maximum penalty of 20 years imprisonment, and a $250,000 fine.