A Minnesota monetary advisor was sentenced to 2 1/2 years in jail for defrauding purchasers out of thousands and thousands, the Division of Justice introduced Thursday.
Along with the 30-month federal jail sentence, a federal choose ordered Kristi Margaret Berge to pay about $2.1 million in restitution. Berge pleaded responsible to wire fraud earlier this 12 months.
Based on the DOJ, Berge was the founder and CEO of Hold Secure Investments, also referred to as KSI Monetary, which acted as a monetary planning agency. Berge was registered with the SEC below KSI Monetary in 2013 earlier than her registration ended on the finish of final 12 months, in response to fee information.
Berge additionally co-owned J&Okay Join, which invested in actual property by shopping for, renovating and promoting properties for a revenue, with places of work for all her firms in Edina, Minn.
However beginning in June 2020 and for practically three years, Berge stole about $2.1 million from a number of purchasers’ accounts by claiming that she’d keep their cash “in secure and safe funding accounts,” like particular person retirement accounts and 401(okay) plans, in response to a felony info doc from earlier this 12 months.
Nevertheless, unbeknownst to her purchasers, Berge repeatedly withdrew purchasers’ funds from their accounts, sometimes taking between $5,000 and $220,000 out at a time and transferring them to her financial institution accounts.
Berge would then use the cash to buy properties for J&Okay Join and, in some instances, use the consumer funds to pay for a property certainly one of her members of the family used as a residence. She’d generally falsely label these withdrawals as “administration” or “administrative” charges to make it appear to be they had been a part of common enterprise.
The DOJ was not the one social gathering pursuing Berge over these accusations. Earlier this 12 months, United Airways filed a lawsuit in Minnesota federal courtroom in opposition to Berge and her enterprise entities, arguing she “improperly” used worker retirement plan property for “private acquire.”
The go well with describes how United staff can make investments retirement contributions by way of a self-directed brokerage account often called a Private Alternative Retirement Account by way of Charles Schwab and might select to rent an unbiased advisor to advise on their funds within the PRCA.
The workers should select an advisor within the Schwab community if the advisor is to cost its charges on to the members’ accounts, and so they can solely withdraw property to pay advisory charges.
Berge was allegedly a type of advisors and entered into contracts with a number of members, in response to United. Nevertheless, some staff’ contacts included agreements with J&Okay Join, by which they agreed to mortgage property from their PRCA to the actual property firm.
Particularly, KSI would cost a “administration price” that may “in actuality, be used to fund a mortgage from the participant to J&Okay.” This meant the charges purporting to be for funding recommendation had been actually going to J&Okay, in response to the United go well with.
“Via this association, and by falsely representing the quantities to the Plan as charges, Berge, KSI and J&Okay contained management over Plan property to which they weren’t entitled, with the intent to make use of these property for their very own acquire,” the United grievance learn.
Based on United, Schwab found the ruse in December 2022, alerting the airline and Berge that they had been conscious the plan property went to J&Okay and to not Berge as advisory charges and terminated KSI as an funding advisor on Schwab’s platform.
Based on subsequent courtroom paperwork, Berge was in default “for failure to plead or in any other case defend” herself in opposition to the costs (by which the courtroom dominated in favor of the plaintiff as a result of the defendant failed to reply).
Berge’s attorneys didn’t reply to requests for remark previous to publication, however in response to the Minnesota Star Tribune, lawyer Bruce Rivers wrote the courtroom asking for a sentence of six months dwelling confinement, writing that Berge had no prior legal historical past and had by no means “got down to damage anybody.”
“Her enterprise took a flip, and she or he made some severe errors alongside the best way and has each intention to repay those that had been harmed,” Rivers wrote.