U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25777 / July 13, 2023
Securities and Exchange Commission v. Joseph Michael Todd, et al., No. 5:23-cv-00431 (M.D. Fla. filed July 12, 2023)
SEC Charges Former Florida Brokerage Representative with Defrauding Senior and Disabled Customers
On July 12, 2023, the Securities and Exchange Commission filed partially settled charges against Joseph Michael "Mike" Todd, a resident of Panama City, Florida, and his entities Todd Financial Services, LLC ("TFS") and TFS Insurance Services LLC ("TFS Insurance"), for defrauding at least 20 brokerage customers of at least $3 million.
According to the SEC's complaint, Todd, while employed as a registered representative and investment adviser representative at a dually-registered broker-dealer and investment adviser, obtained investor funds through deceptive means by instructing his brokerage customers to write checks payable to TFS, TFS Insurance, or Todd by falsely assuring customers that he and his entities would invest the customers' funds in various securities. As alleged, Todd instead misappropriated investors' funds and kept the money for his own personal use, spending it on real estate, boating, hunting, casinos, and adult entertainment. The complaint further alleges that, in order to conceal and continue his scheme, Todd presented defrauded customers with forged account statements or portfolio holdings statements that contained falsified entries indicating the customers were invested in the products promised by Todd. Many of the victims of Todd's scheme were seniors and/or disabled individuals, the complaint alleges. According to the complaint, Todd also made Ponzi-like payments to at least one customer by using other customers' funds to make regular deposits from a TFS bank account into this customer's account, which he falsely claimed were interest payments or regular distributions on an investment.
The SEC's complaint, filed in federal court in the Middle District of Florida, charges Todd and TFS with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, and Todd, TFS, and TFS Insurance with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC's complaint seeks disgorgement, civil penalties, permanent injunctions, and conduct-based injunctions stemming from the Defendants' wrongdoing, and a permanent officer-and-director bar against Todd.
To settle the Commission's charges, Todd, TFS, and TFS Insurance, without admitting or denying the SEC's allegations, have consented to the injunctive relief and the officer-and-director bar for Todd, and to pay disgorgement, prejudgment interest, and civil penalties in amounts to be determined by the Court at a later date upon an SEC motion.
The SEC's investigation, which is ongoing, was conducted by Caryn Trombino, Larry Brannon, Neal Jacobson, and Ellen Lynch, and supervised by Jeffrey Shank of the Chicago Regional Office. The litigation will be led by Daniel Hayes.
The SEC appreciates the assistance of the Financial Industry Regulatory Authority.