The SEC has barred an investment advisor who was sentenced to more than 14 years in prison from the securities industry for his part in a Ponzi scheme to defraud at least 17 investors of more than $13 million.
The commission’s order concerning Steven Pagartanis, originally reported by Regulatory Compliance Watch, cited the Justice Department’s charges against the Long Island–based advisor (and his subsequent guilty plea), as the reason behind his permanent banishment.
According to the DOJ, between January 2000 and March 2018, Pagartanis, 60, solicited investors to invest in two publicly traded companies he touted. The Justice Department did not name the firms Pagartanis was affiliated with, but his BrokerCheck profile includes a long list of firms he worked for during the time in question, including stints with Cadaret, Grant & Co., Woodbury Financial Services and a final position at Lombard Securities, where he worked from September 2017 before apparently being fired the following March.
According to the DOJ, Pagartanis told investors they’d see an 8% return on their investments in the two companies and asked them to write checks payable to an entity Pagartanis controlled. He laundered the investors’ funds through several bank accounts and then used them for personal expenses, to pay for luxury items and fund “failed business ventures including his wife’s pet store,” the DOJ stated.
He also used money raised from new investors to pay interest and dividend payments for previous ones, with total losses exceeding $9 million. The funds included money for ill family members, college expenses and home maintenance, according to the DOJ.
Pagartanis pleaded guilty of conspiracy to commit mail and wire fraud on Jan. 9, 2020, and was sentenced several days later. Richard Donoghue, a U.S. attorney for New York’s Eastern District, called the 170-month sentence a “well-deserved reckoning” for the advisor, saying he’d preyed on elderly investors who had trusted him with their life savings. Pagartanis will have three years of supervised release following his prison term, and he was also ordered to pay $6.5 million in restitution, according to the DOJ.
The SEC began proceedings against Pagartanis in August of last year, while FINRA barred the advisor on Apr. 13, 2018, according to his BrokerCheck profile. Pagartanis was also subject to a customer complaint through FINRA seeking more than $2.7 million in damages (as of Sept. 13, 2019, the advisor had yet to comply with the award, according to his profile).
