A Sutton man who ran a Worcester investment firm defrauded clients of nearly $3 million by creating fictitious accounts and paying clients with funds from other clients, the FBI and U.S. Securities and Exchange Commission allege.
James K. Couture, 42, is facing both civil and criminal actions in federal court, records show, and has signed a plea agreement on charges of wire fraud and aggravated identity theft.
The FBI alleges in court documents that Couture perpetrated the fraud through an investment advisory services firm he created, The Private Wealth Management Group LLC, as well as a shell company he created, Legacy Financial Group LLC.
Couture defrauded at least seven clients, court records indicate, including a retiree of an unnamed Worcester law firm for whom he managed a retirement plan.
According to Acting U.S. Attorney Nathaniel R. Mendell, Couture misappropriated about $2.8 million in client funds from 2009 to 2020 by transferring funds out of client accounts for investment in fictitious funds and using the money for other purposes.
The purposes included using client money to pay fake investment returns to other clients he had defrauded, Mendell said, as well as to purchase a client list from another investment advisor.
The Private Wealth Management group had offices in Worcester and Springfield, the FBI said, while Legacy Financial Group was based in New Hampshire.
The FBI wrote in court documents that Couture had clients of The Private Wealth Management Group transfer assets to Legacy, “but he did not tell them that Legacy was only a shell company that he controlled and did not hold or offer bona fide investment products.”
Couture created fake account statements for clients, the FBI alleged, when in fact the funds did not exist. He created statements that falsely made clients believe they were making money, it said.
Federal electronic court records indicate that Couture on May 28 signed a plea agreement with the government on the criminal charges he faces — three counts of wire fraud and one count of aggravated identity theft.
A date for a change of plea was not entered in court records. If Couture were to plead guilty, prosecutors would seek between 66 and 91 months in prison and forfeiture of $2.87 million, the agreement states.
The SEC also filed a parallel civil action in federal court June 1 seeking a “permanent injunction from future violations of the securities laws, disgorgement and prejudgment interest, and a civil monetary penalty,” according to a news release.
“Couture transferred client money through a web of third-party accounts to disguise that he was misappropriating money from one client to replace funds he had previously stolen from another,” the SEC alleged.
Couture’s lawyer in his criminal case, Brad Bailey, declined to comment Wednesday.
This article originally appeared on Telegram & Gazette.
