BELLINGHAM - A Bellingham stockbroker has been charged with stealing $260,000 from his clients' accounts, according to the U.S. Attorney Office in Seattle.
Many of Jeffrey M. Knutsen's customers at Bellwether Financial Services, or BWM (short for Bellwether Wealth Management), were elderly. He neglected to inform them that he'd been banned from financial advising in 2005, after a client accused him of withdrawing about $90,000 from her clearing house account. In a kind of plea deal he agreed to pay back the money and to stop working as an advisor but didn't admit guilt, according to Financial Industry Regulatory Authority records.
Shortly after the ban, he told his remaining clients he'd need to transfer their money to online accounts with TD Ameritrade and E-Trade because, as he told the customers, their old account holder, Linsco Private Ledger Corp., planned to charge higher fees.
In reality, detectives suspect he wanted to avoid federal oversight. Knutsen, 43, registered the accounts under his clients' names, but he had check-writing privileges and full control of the investments. He used his own email addresses but otherwise kept his name off the registration forms.
He charged a fee of 0.85 to 1 percent of the balance to manage the funds. Federal prosecutors allege he skimmed much more - a total of $260,000 - from 17 victims' accounts.
From one elderly couple, for example, Knutsen took closer to 30 percent of their $254,000 in savings, according to the charges. Prosecutors believe he deposited their money in his own Peoples Bank checking account, by making 109 electronic transfers to himself over the course of seven years. Detectives found Knutsen never made trades or investments with the couples' money, as they had asked him to do.
"In short," the complaint states, "the assets simply sat in the account."
It took years for the couple to realize how thoroughly their account had been pillaged. They reported the theft to police in November 2012. Knutsen denied mishandling the accounts in a voluntary interview with Bellingham detectives.
Police and FBI agents dug into Knutsen's finances and found more than a dozen other possible victims. After a lengthy investigation, Knutsen was charged with wire fraud Wednesday, June 4, in U.S. District Court in Seattle.
Anyone can do a free background check on a broker's history by visiting brokercheck.finra.org.
The name of the U.S. Attorney's Office was corrected June 6, 2014.