Defendant in SEC Enforcement Action Pleads Guilty to Investment Adviser Fraud and Lying to the SEC
Litigation Release No. 24349 / November 13, 2018
Securities and Exchange Commission v. Richard G. Cody, et al., No. 16-cv-12510 (D. Mass.)
United States v. Richard G. Cody, No. 17-cr-10291 (D. Mass.)
On November 9, 2018, Richard G. Cody, a former investment adviser and broker representative whom the Securities and Exchange Commission charged with defrauding Massachusetts retirees, pled guilty to criminal charges filed by the U.S. Attorney for the District of Massachusetts.
The SEC previously charged Cody on December 12, 2016. According to the SEC's Complaint, Cody defrauded at least three of his retired clients over a twelve-year period by concealing the fact that their retirement accounts had lost substantial value and were being rapidly depleted. Cody allegedly concealed these losses by leading the clients to believe that their investments were maintaining steady value and that the clients were living off income from their investments. By 2014, two of the retirees' accounts had essentially run out of funds. Cody allegedly continued to hide that the retirees' money was gone by making wire transfers of monthly deposits to the retirees' bank accounts and sending the clients fabricated tax forms. The SEC alleges that these deceptive acts caused Cody's clients to believe that their retirement savings were secure when, in fact, they were not.
The criminal charges in the indictment, which was filed on September 26, 2017, arose from the same conduct alleged in the SEC's Complaint against Cody. The indictment also alleged that Cody lied to the SEC during a March 2017 sworn deposition in connection with the SEC's action against Cody. Cody allegedly made false declarations during the deposition when he denied that he had provided fraudulent documents to two investors. Cody pled guilty to the charges and the court accepted Cody's plea. He is scheduled to be sentenced on February 4, 2019.
On December 22, 2016, the SEC obtained a preliminary injunction and an asset freeze against Cody and his company, Boston Investment Partners LLC, from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC's litigation against Cody, which seeks disgorgement of allegedly ill-gotten gains, plus interest and penalties, as well as permanent injunctive relief, is ongoing.