Aurora man steals $366,000 from employer and investment clients - KCTV5

Aurora man steals $366,000 from employer and investment clients

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BEACHWOOD, OH (WOIO) -

An Aurora man was charged with 10 counts of defrauding his Beachwood-based employer and its investment clients out of about $366,000, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the Cleveland office of the Federal Bureau of Investigation.

Andrew J. Franz,41, was charged with three counts of mail fraud, one count of securities fraud, one count of investment adviser fraud and five counts of income tax evasion.

"This defendant betrayed the trust of his employer and his clients," Dettelbach said. "He lined his pockets with the money that people worked a lifetime to save."

Anthony said "Andrew Franz enriched himself with hundreds of thousands of ill-gotten dollars by creating and carrying out various fraudulent schemes. The FBI will continue to work with our law enforcement partners to bring to justice those that steal the hard-earned money of others."

Franz, through his employment and association with the Ruby Corporation (Ruby), a Beachwood investment company, defrauded Ruby and at least 10 of its clients by misappropriating more than $366,000 in customer funds for his own personal use and benefit.

Franz submitted quarterly fee requests to mutual fund and annuity companies for payment of investment advisory fees for Ruby's clients' investment accounts.  Franz then caused these companies to issue checks by mail to Ruby, which he then intercepted and deposited into bank accounts he maintained and controlled.

Franz submitted some fee requests that were for amounts not due and payable to Ruby, or that were greater than were due and payable to Ruby.  Franz also caused mutual fund and annuity companies to send some of these fraudulently obtained fee payments through the mail to his own residence, according to the information.

On some occasions, Franz deposited the funds obtained by his fraudulent fee requests into the accounts of Ruby in an attempt to conceal his fraudulent activity.  Franz also contacted a mutual fund company by telephone and, misrepresenting himself as the owner of a trust, caused the mutual fund company to mail payments to Franz's personal residence. 

According to the report, Franz committed income tax evasion from 2007 to 2009 by filing false and fraudulent tax returns. 

Franz is also charged with income tax evasion for 2010 and 2011 by failing to make an income tax return.   The total amount of additional tax due and owed by Franz for the tax evasion is $245,352, according to the information.

The case is being prosecuted by Assistant U.S. Attorney Christian H. Stickan and Trial Attorney Scott M. Watson, following investigation by agents of the FBI, Cleveland Office and IRS-Criminal Investigations, Cleveland Office, with assistance of the United States Securities and Exchange Commission, Chicago, Illinois.

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