U.S. Indicts Fugitive Laguna Hills Broker

LOS ANGELES — A Laguna Hills securities broker turned fugitive was indicted Thursday in a second wave of prosecutions against so-called rogue brokers accused of preying on seniors, widows and other vulnerable investors.

Henry Clay Maxwell, 27, was accused by a federal grand jury in Los Angeles of defrauding an elderly victim of $280,000 in securities, then transferring the proceeds to accounts in New York City, South Carolina and the Bahamas.

Maxwell is one of 17 individuals indicted or convicted nationwide in the last year, bringing the total number of those accused to 28 since Atty. Gen. Janet Reno launched sweeps against rogue brokers in late 1995.

Two months ago, Michael R. Warren, 41, a former San Marino investment advisor who pleaded guilty to five felony fraud charges, was sentenced to 33 months in prison and ordered to pay more than $600,000 in restitution to mostly elderly victims.

“These abuses are a serious threat to the economic well-being of investors and the investment industry,” Reno said in prepared remarks.

The attorney general has been targeting a variety of scams, including illegal telemarketing operations, that take advantage of elderly residents.

“Criminal prosecution is particularly warranted for those who target the elderly and other vulnerable victims,” said U.S. Atty. Nora M. Manella in Los Angeles.

The criminal cases against the rogue brokers are in addition to other criminal and civil cases brought by states and other federal agencies against brokers and other investment advisors, said Myron Marlin, a deputy Justice Department director.

Maxwell, a former broker in the Laguna Hills office of A.G. Edwards & Sons Inc., is charged with obtaining $280,000 in bearer bonds from an elderly investor. Bearer bonds can be redeemed for cash by anyone who possesses them.

Maxwell told his victim that the bonds would be deposited into an A.G. Edwards account in the victim’s name, said Assistant. U.S. Atty. David Z. Seide, but the broker instead redeemed the bonds and moved the cash into accounts out of state.

Authorities declared Maxwell a fugitive and obtained a warrant for his arrest. “We have not been able to find him at known locations, but we’re looking for him,” Seide said.

Warren pleaded guilty in December to investment advisor fraud, wire fraud and mail fraud in operating two Los Angeles companies, Keypoint Financial Corp. and Westcourt Income Partners, and a Santa Monica firm, Boardroom Advisory Corp.

He swindled investors in the Los Angeles companies of more than $640,000 by falsely claiming to offer annuity contracts or units of a real estate limited partnership. Most of the investors were elderly California and New York residents.

Warren used Boardroom to bilk a Santa Monica couple of $175,000 in what was supposed to be investments in various mutual funds.

“The Warren case is significant because it shows that these brokers can get serious time,” Seide said.

Maxwell and Warren are the only two Southern California brokers among the 28 accused or convicted.