A onetime Wells Fargo investment adviser in the Twin Cities has been charged with defrauding several clients out of more than $5 million, even perpetuating the scheme after he was fired and barred from his profession by regulators, according to charges filed in federal court.
Bradley Smegal, 63, was charged Monday in U.S. District Court with two counts of securities fraud. Smegal has been charged by "information," meaning that he's notified authorities of his intention to plead guilty to the allegations.
In April 2013, he and his wife, Catherine, filed for personal bankruptcy, according to federal court records in the Seattle area, where the Smegals now live. They cited $50,000 to $100,000 in assets — including cars, Rolex watches and high-end jewelry — and millions of dollars in debts, including court claims made by two clients for $1.3 million and $1.4 million.
One of the clients was approached by Smegal in 2002, when he worked for Piper Jaffray, her suit against him noted. The woman's cousin then joined her as a client in 2003. He persuaded them to invest in, among other things, a hospital in Sri Lanka that was similar to the high-profile Doctors Without Borders.
The cousins' claims against Smegal have been settled, one of the women said Tuesday, but neither got all of her money back.
According to prosecutors:
For several years until January 2013, Smegal persuaded 14 clients to make investments totaling $5.14 million that he described as "conservative" and "guaranteed specific rates of return," the charging document read.
He told them he was making the same investments but didn't disclose how much he was investing.
