Richard A. Finger, a Bellevue man who owned a stock brokerage in Kirkland and pleaded guilty to defrauding 10 clients of as much as $7 million, was sentenced Friday in federal court to four and one-half years in prison, according to the U.S. Department of Justice.
Finger, 32, who pleaded guilty to wire fraud last November in an agreement with federal prosecutors, also must pay up to $7 million in restitution and serve three years of supervised release, according to a Department of Justice release.
Finger, who operated Black Diamond Capital Management, LLC and Black Diamond Securities, LLC, was admonished in his sentencing in Seattle by U.S. District Judge Ricardo S. Martinez.
“You had to know the potential impact this would have on all the people who trusted you with their savings. What did you see when you looked in the mirror?” Martinez asked Finger, according to the U.S Department of Justice press release.
According to the federal criminal complaint, some of the clients invested with Finger while he worked for a Seattle brokerage firm, including one client who placed almost $700,000 with him for investment. From the fall of 2009 through 2010, Finger allegedly assured the client the investment was growing while in fact it was sustaining serious losses. When he moved to his own firm in Kirkland, Finger showed the client fake statements that showed it was worth $1.2 million when it was actually worth only $5,500, according to the complaint.
The plea agreement indicates a second client invested $1 million with Finger in early June of 2011, and by the end of the month the account had lost $160,000 due to trades. The client was also charged an additional $400,000 in commissions. By mid July 2011, the account was worth less than $225,000. This second client and nine others were provided false statements by email.
At the same time, the plea agreement maintains Finger transferred hundreds of thousands of dollars from the brokerage accounts to his own checking account as commissions to pay for his credit card bills, food and entertainment as well as business expenses such as payroll, fees and taxes.
In a sentencing memo, prosecutors said Finger was leading a lavish lifestyle, leasing a $71,000 Cadillac Escalade and a $13,000 Ducati motorcycle.
“Month after month, defendant Finger led investors to believe that he was generating positive returns on their millions of dollars when, in fact, he was causing significant losses and siphoning of hundreds of thousands of dollars in undisclosed, excessive commissions. Defendant Finger’s fraud allowed him to live a very lavish lifestyle at the expense of his investors,” prosecutors wrote.
Finger remains free, said Emily Langlie, spokeswoman for the U.S. Attorney’s Office for Western Washington, and will be assigned to a prison facility to begin serving his term, likely in four to six weeks.
The case was investigated by the FBI and the Kirkland Police Department, as well as agents out of the Security and Exchange Commission’s San Francisco office. This case was brought in coordination with President Obama’s Financial Fraud Enforcement Task Force, which was established to wage an aggressive and coordinated effort to investigate and prosecute financial crimes.