On December 27, 2018, John G. Schmidt was charged in a 128 count indictment by the Montgomery County, Ohio Prosecuting Attorney. According to Investment News, the Prosecutor alleges that Schmidt, while employed a financial advisor for Wells Fargo Advisors, stole money from clients while operating a Ponzi scheme. The Prosecutor further alleges that Schmidt created fictitious account statements in order to hide his fraud from his investor clients.
According to Schmidt’s publicly available FINRA BrokerCheck Report, he was employed with Wells Fargo Advisors Financial from 2006 to October 24, 2017 when he was terminated for cause “after allegations of unauthorized money movement between clients, and after the Firm was notified of an allegation of the existence of inaccurate statements which appear not to have been generated or approved by the Firm.” Only days after Schmidt was fired by Wells Fargo, the customer complaints began rolling in alleging he had stolen money. Some of those cases have been settled but a few are still pending. On September 25, 2018, the Securities and Exchange Commission filed a civil complaint against Schmidt outlining the details of this Ponzi scheme.
Schmidt’s Ponzi scheme is why the SEC and FINRA have mandated for generations now that brokerage firms adequately supervise their brokers. In 1989 the SEC clearly outlined a brokerage firm’s supervisory responsibilities: