Houston-Area Adviser Pleads Guilty in $1.9 Million Fraud
Lawrence Allen DeShetler, an investment adviser and certified financial planner in The Woodlands, Texas pleaded guilty to mail fraud in U.S. District Court in Beaumont, Texas.
DeShetler fraudulently obtained $1.9 million from five clients of his advisory business, DeShetler & Company Inc. He faces a maximum sentence of 20 years at sentencing.
In connection with the plea agreement, DeShetler will not contest a State of Texas administrative law case that the Texas State Securities Board filed to revoke his registration as an investment adviser.
According to the information filed in federal court, DeShetler advised clients on investment strategies and financial planning. In 2014, he started urging clients to withdraw money from their investments and give him the proceeds with the promise of higher returns. Instead of investing their money, DeShetler placed the funds into a bank account over which he had sole authority.
In a proceeding at the State Office of Administrative Hearings, the inspections and compliance division of the Texas State Securities Board filed a notice of hearing in August 2016 to revoke his registration.
State Securities Board staff alleged that DeShetler misapplied funds from a client’s individual retirement account that was once worth approximately $730,000. Staff alleged that in January 2016, he advised a client to cash out her IRA and transfer the funds to him. DeShetler said he would invest the money in a new IRA, but deposited the funds into the bank account cited in the Information. He spent a portion of the client’s money on restaurant bills, country club fees, clothing, and pool cleaning services.
The case was pending when DeShetler was arrested in August 2016 and subsequently indicted on state theft charges in November 2016 in Montgomery County, Texas. He remained in Montgomery County jail until shortly before his guilty plea in federal court yesterday.
The criminal case was investigated by the FBI, the Texas State Securities Board, the district attorneys in Montgomery and Jefferson counties, the sheriffs’ offices in Orange County and Montgomery County, and the Texas Department of Public Safety.
