Former Merrill Lynch Financial Advisor Indicted for Stealing Millions from Clients and PPP – Fraud Friday
August 2, 2024
Delaney Sexton
Contributing Editor
Former Merrill Lynch Financial Advisor Indicted for Stealing Millions from Clients and PPP – Fraud Friday
Government officials were finally able to pin down an alleged serial fraudster after he “actively [concealed] his whereabouts” for two years. Jared Dean Eakes was first arrested on May 20th due to accusations that he stole more than $2.7 million from 17 clients while working as a financial advisor. The original indictment was then superseded just two months later with one that revealed more charges in relation to claiming $4.75 million in PPP loans.
In the most recent update, the government claimed that Eakes applied for four PPP loans. The applications contained fraudulent documents and false statements in connection with the number of employees and payroll. Two entities he used in the PPP loan applications were part of his alleged original fraud scheme to steal from investors. After being approved and receiving the funds, he withdrew them in cash or engaged in options trading.
The SEC alleges that Eakes owned and operated GraySail Advisors, LLC from 2018 to 2019 and previously worked as a registered representative with Merrill Lynch. A second individual, Daughtry, sold his advisory business to GraySail. Daughtry informed his clients of very little, including that he had previously sold all their accounts to GraySail. He promised that he would continue monitoring their accounts and reviewing transactions, but he did not fulfill these promises. Clients began coming forward and questioning Daughtry on investments being made with their accounts.
After selling his client’s accounts to GraySail, Eakes allegedly stole around $2 million from Daughtry’s clients. Eakes did this by selling fake promissory notes from a company, Small World Capital, LLC, to the clients. For example, he caused five client accounts to purchase $1.5 million in unsecured promissory notes.
The complaint says: “Eakes did not disclose these sales to Daughtry or his clients. Rather, Eakes photocopied or cut-and-pasted client signatures from other documents onto the promissory notes, submitted the notes to the firm that administered the clients’ Individual Retirement Accounts (“the IRA Administrator”), transferred the proceeds from clients’ IRA accounts at that firm to a Small World bank account, and then convinced the unwitting account holder to transfer those funds to Eakes.”
Beyond Daughtry’s clients, Eakes also allegedly acquired seven clients from a broker-dealer registered representative in Arkansas with around $850,000 assets under management (AUM). The SEC claims he misappropriated $660,000 from six of the clients by purchasing Small World notes with their accounts.
With the stolen funds, he allegedly withdrew cash, paid personal expenses including student loans, transferred funds to a Las Vegas casino company, and transferred $451,000 into his personal brokerage account “where he promptly lost almost the entire amount trading in options.”
Jared Dean Eakes is charged with five counts of wire fraud and three counts of bank fraud. Each wire fraud count has a maximum penalty of 20 years in federal prison, and each bank fraud count has a maximum penalty of 30 years in prison. The U.S. is also seeking forfeiture in the amount of $7,489,732.20.
Sources:
U.S. Attorney’s Office Press Release
SEC Complaint
Financial Advisor IQ Article