A federal grand jury has indicted a former Wells Fargo broker on five fraud charges over allegations that he stole $3 million from clients.
Kenneth A. Welsh, who was at Wells Fargo from 2012 to 2021, was indicted Wednesday on four counts of wire fraud and one count of investment advisor fraud. Welsh stands accused of misappropriating at least $3 million from five clients over four years starting in 2017.
A statement from the U.S. Attorney's Office for the District of New Jersey said Welsh is believed to have taken money out of his clients' brokerage accounts and moved it into accounts he controlled.
"As alleged in the indictment, this defendant used his position as an investment advisor to gain the trust of his victims and then exploited that trust," U.S. Attorney Philip Sellinger said in a statement.
A Wells Fargo spokesperson declined to comment on the case.
Welsh was separately charged by the Securities and Exchange Commission in November 2021 with violations of the Securities Exchange Act of 1934, the Securities Act of 1933 and the Investment Advisers Act of 1940. The SEC alleged that Welsh used the money drawn from his clients' accounts to pay off debt on credit cards belonging to his wife and parents.
The SEC accused him of making at least 137 fraudulent transactions. Stolen money was used to buy gold coins, precious metals and luxury goods, the regulator alleged. The U.S. Attorney for New Jersey filed criminal charges at the same time.
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Welsh joined the industry in 2004, starting in Fairfield, New Jersey, at one of the offices Morgan Stanley had acquired through its purchase of the brokerage firm Dean Witter. He also worked for Wells Fargo in Fairfield.
Welsh has 10 customer complaints and other disclosures on his record, according to the BrokerCheck database maintained by the Financial Industry Regulatory Authority. All of them are from either 2021 or 2022 and most have to do with the alleged fraud.
