Compliance officers often do well to think like criminals. But the person who played that role at broker-dealer Trident Partners, allegedly went a step further.
William Michael Quigley became a criminal himself, using his position as the firm's compliance chief to launch a criminal enterprise through which he looted $500,000 over more than a decade, the SEC and federal authorities say.
"William Quigley subverted his position of trust as compliance director and stole money from investors and his own firm," Andrew Calamari, director of the SEC's New York regional office, said in a release. Calamari, whose office is charging Quigley with fraud, also likened him to the proverbial "fox guarding the henhouse."
The U.S Attorney's Office for the eastern district of New York has also charged Quigley with two counts of conspiracy to commit wire fraud and money laundering. The two bodies cooperated in their investigations.
Quigley was arraigned Thursday at federal court in Central Islip, N.Y., according to a release from the U.S. Attorney's Office. He could face up to 20 years in prison.
STOCK PURCHASES NEVER MADE
The cases center around stock purchases that were allegedly supposed to be made via Trident for overseas clients.
Working with his brothers Brian and Michael Quigley, both based in the Philippines, Quigley purported to sell blue-chip stocks in companies like Berkshire Hathaway, BlackRock and Dell, according to a statement by the U.S. Attorney's Office.
However, the SEC claims, "Michael Quigley and Brian Quigley never purchased any of the offered securities for the investors." Instead, the brothers allegedly stole the money.
Quigley ran his alleged deception by opening three brokerage accounts, including a secret account at his then-employer Trident, the SEC says.
"It was Quigley's job as compliance director to open and properly route all incoming mail as well as to monitor all wires and report any suspicious transfers," the commission says. "Quigley allegedly abused his position to keep Trident Partners from learning about the secret account and its corresponding wires."
Then Quigley began visiting dozens of local ATMs, the SEC says.
"After investors wired their funds to bank and brokerage accounts that Quigley set up and controlled," the SEC statement says, "the money was quickly wired to a bank account in the Philippines or withdrawn in small increments from ATM machines in the vicinity of Quigley's home and office. Quigley allegedly worked in concert with two brothers who live in the Philippines and handled the solicitation aspects of the scheme while he funneled investor money out of the accounts to his brothers and himself."
Trident is not charged in the case, and Trident's lawyer, Robert Rabinowitz, insists that there was "no investor harm here to Trident clients."
In addition, the SEC alleges, Quigley "stole commission checks to Trident Partners and deposited them in outside accounts he used in the scheme." Rabinowitz says the commissions stolen were 12b-1 trails.
DATING TO 2003
Although Quigley worked for Trident for the last seven years and no other broker-dealer is named in the case, the frauds date back to 2003, the SEC claims.
At the time, Quigley was working for broker-dealer Joseph Stevens in Brooklyn, according to BrokerCheck; he bounced back and forth between that firm -- which was shut down in 2008 -- and Woodbury, N.Y.-based Trident over the next four years, according to the SEC.
Quigley did not return calls to his home in Seaford, N.Y. Reached by phone, his New York-based defense counsel, Barry Bordetsky, declined to comment.
Quigley hasn't been registered with FINRA since last September, and an attorney for Trident says the firm dumped him last year.
"Once Trident Partners became aware of Mr. Quigley's suspicious activities, the firm terminated his employment and informed regulatory authorities," Rabinowitz said in a statement. "Trident Partners has confidence that the regulatory action that the SEC has taken is appropriate under the circumstances."
Calls to the offices of Trident itself went directly to voice mail and the firm did not immediately return messages.
TAKING THE FIFTH
When the SEC subpoenaed Quigley last summer to testify under oath, Quigley invoked his Fifth Amendment right not to incriminate himself, refusing to answer almost all questions, the commission says in a court filing.
Rabinowitz says Trident was unaware that Quigley had been subpoenaed.
Quigley also tried to use the court to keep the commission from subpoenaing his account records at two New York banks, according to an SEC filing in the matter. A federal judge denied both of Quigley's motions.
This isn't the first time either Quigley or his former employers have run afoul of regulators.
Quigley lost $90,000 at one previous B-D by letting one of his brothers trade in one of his accounts without authorization, according to FINRA and the SEC.
Trident Partners has 13 disclosure events on its FINRA BrokerCheck report and Joseph Stevens lists 17.
More than a decade ago, FINRA expelled another firm -- Bayville, N.Y.-based broker-dealer Win Capital -- from the industry while Quigley served as its compliance director. Win had failed to pay a $3.5 million claim to another firm, according to FINRA.
The criminal case against Quigley is being brought as part of a body called the President's Financial Fraud Enforcement Task Force, according to the U.S. Attorney's Office. President Obama formed the body -- comprises more than 20 federal agencies, 94 U.S. attorneys' office and state and local partners -- in 2009 to create better coordination between law enforcement and other governmental bodies.
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