He promised guaranteed minimum returns of 4%. His clients bought in. But what followed over six years was an alleged $2.4 million fraud, used to pay for home renovations, child support and luxury items.
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“Many of Matthes’ victims had been his customers and clients for several years, and trusted Matthes to manage their investments,” the SEC says in its legal complaint filed in Eastern District Court in Milwaukee.
Matthes allegedly used the funds to renovate his home, pay child support and buy luxury items.
Through his attorney, James LaVoy, Matthes declined to comment.
The fraud comprised two parts, according to the SEC. In the first part, which reaped $1.4 million for Matthes, he began telling some brokerage clients in 2013 that a new investment opportunity would generate a higher return than variable annuity contracts he previously had sold them, the SEC says.
“In reality, the fixed investment did not exist and Matthes used all of the funds he raised for his own personal use and to make Ponzi-like payments to certain customers,” the commission alleges.
In the second part of the alleged fraud, Matthes misappropriated an additional $1 million by making unauthorized sales and withdrawals from his clients’ variable annuities. Before selling variable annuities, Matthes provided clients with partially-filled out annuity applications and asked them to complete and sign the
forms, the SEC says. In some applications, however, Matthes allegedly entered the routing and account number for his personal bank account instead of his clients’ account information.
The alleged thefts occurred from April 2013 to March 2019, the SEC says.
Matthes allegedly covered his tracks with fake account statements and Ponzi-like payments, the regulator says.
Wisconsin’s securities division has permanently barred Matthes.
A spokeswoman in the U.S. Attorney’s office in Milwaukee would not confirm an investigation is underway into the case. If it were, she added, the U.S. Attorney’s Office could not disclose that until such a time when charges might be filed.
Matthes has been a registered advisor for roughly 20 years, according to FINRA BrokerCheck. During the time of the alleged fraud, he was registered with Mutual of Omaha. He has past experience at Thrivent, MassMutual and AAL Capital Management.
“Mutual of Omaha is involved in litigation against Mr. Matthes, and it is our practice not to comment on pending litigation,” Jim Nolan, a spokesman for Mutual of Omaha, said. He did not say whether or not Matthes’ former clients have been made whole.
Earlier in his career, between 2005 and 2006, two clients accused Matthes of causing them $15,861 in total losses over two cases, for misrepresenting the investments, according to FINRA BrokerCheck records. In 2006, he voluntarily resigned from his job with MassMutual after the state of Missouri fined him $7,308 for an improper sale of a variable annuity. Matthes, now 49 and living in Pewaukee, Wisconsin, says in his BrokerCheck response that his decision to leave MassMutual was unrelated to the accusations against him.
