Former advisor files appeal in murder-related Ponzi scheme case

Keith Todd Ashley, a financial advisor accused of slaying a former client and running a nearly $2 million Ponzi scheme, wasn't up against murder charges in a federal case that recently landed him a life sentence.

But his lawyer argues facts from Ashley's related state-level murder case were stretched to enhance the allegations that eventually led federal Judge Amos Mazzant's order on Aug. 17 for Ashley to spend the rest of his life behind bars. James Whalen, a Frisco, Texas-based lawyer who represented Ashley in the federal case, filed a notice of appeal of Ashley's sentence on Monday.

Whalen, the founder of Whalen Law Office, said he plans to argue federal authorities "overreached" in their prosecution of Ashley.

"Granted, the jury found him guilty," Whalen said. "But, you know, it's kind of hard not to when you have this murder that they put out there. But I think the substantive charges in the federal charges are not supported by the evidence."

Ashley, a 51-year-old financial advisor formerly employed at Parkland Securities in Allen, Texas, received his life sentence on charges that he had committed as part of a Ponzi scheme that he's alleged to have carried out for roughly seven years before his arrest in November 2020. 

Roughly two years after being taken into custody, he was found guilty by a federal jury of 17 criminal counts relating to wire, bank and mail fraud and carrying a firearm in relation to a crime of violence. Ashley meanwhile is faced with murder and other charges in a related state-level case.

Texas authorities accuse Ashley of entering the home of James Seegan, a client living in Carrollton, Texas, on Feb. 19, 2020, and shooting Seegan with a handgun. They say Ashley went to the house on the pretext of taking a blood sample needed to change the beneficiary on a life insurance policy from Seegan's wife to a trust controlled by Ashley.

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Instead of drawing blood, Ashley — also a trained nurse — is believed to have injected Seegan with a drug that caused temporary paralysis. He later, according to authorities, tried to cover up the shooting by making it look like a suicide.

Whalen said prosecutors sneaked the facts related to the alleged slaying into the federal case by charging him with possessing a firearm in furtherance of a crime of violence. The charge enhancement needed to secure the life sentence, Whalen said, rested partly on a law known as the Hobbs Act, which deals with robbery.

The flaw in the prosecutors' case, Whalen said, is that the Hobbs Act only applies to crimes affecting interstate commerce.

"And so, if that goes away, the one enhancement for life, that would go away too, that would be that would not stand up on appeal," Whalen said.

Attempts to reach the U.S. attorney's office for the Eastern District of Texas weren't immediately successful. After Ashley's life sentence was handed down, U.S. Attorney Damien Diggs released a statement saying, "Today's sentence brings a sense of relief and justice to the victim's family and friends, who have endured pain and grief as a result of the defendant's horrific actions."

Whalen said Ashely's state-level murder case is likely to depend on the outcome of the appeal of the federal life sentence. If the sentence is allowed to stand, state prosecutors may see no point in pressing their separate charges.

Ashley's lawyer in the state-level case, Toby Shook of the Dallas-based firm Shook & Gunter, did not immediately respond to requests for comment.

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Seegan was just one of nine victims of Ashley's alleged Ponzi scheme. Prosecutors allege that he lied about his plans to invest his clients' money in financial products, instead using it to support a struggling brewery business (Nine Band Brewing), pay credit card bills and gamble at casinos, among other things. The investigation into the alleged scheme took nearly nine months and involved cooperation by local police, the FBI and the U.S. attorney's office.

Christine Lazaro, the director of the Securities Arbitration Clinic at the St. John's University School of Law, said a big question in cases like these is whether the surviving victims will ever receive restitution of the money they lost. Groups like the Public Investors Advocate Bar Association, a legal organization for investors, have long complained that fraud victims are seldom able to recoup losses, even after successfully pressing their cases before regulators.

"When you have brokers who engage in this kind of misconduct and just rip people off, there is not much that can be done to recover those funds, unless the money can be found," Lazaro said. "Oftentimes, it's spent already."

Ashley was discharged in October 2020 from Parkland Securities, where had worked for 18 years, on suspicion of undisclosed outside business activities and a failure to provide the firm with notice of private securities transactions. A spokesman for Parkland Securities declined to comment.

About two years after his firing, Ashley was barred by the Financial Industry Regulatory Authority, which oversees the brokerage industry. The ban came after Ashley failed to respond to FINRA requests for information about his firing.