Elias Hafen, who was fired by Wells Fargo in August 2018 and barred by Finra in October 2018, pleaded guilty in a federal court in New York to investment adviser fraud in connection with having defrauded his clients out of hundreds of thousands of dollars.
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"Elias Hafen promised his investment clients significant returns in a 'special' fund," said U.S. Attorney Geoffrey S. Berman. "With fake statements and guaranteed returns, (Mr.) Hafen was every investor's worst nightmare. He never invested his clients' money and instead used it to fund his own lavish lifestyle."
From 2013 until 2018, while he was a broker at Morgan Stanley, Mr. Hafen engaged in a scheme to defraud at least 11 of his financial advisory clients into believing that he had access to a high-yield investment fund with guaranteed returns, which was not affiliated with Morgan Stanley.
Mr. Hafen also created fictitious "Investor's Statements" bearing the name of a nonexistent investment company purporting to detail the status of his victims' investments, the U.S. Attorney's Office said.
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"In reality, however, there was no investment fund at all. He was using the victims' funds to pay for a lavish lifestyle including custom men's accessories and an expensive collection of artwork," the release said.
Mr. Hafen, of New Canaan, Conn., pleaded guilty to one count of investment adviser fraud, which carries a maximum penalty of five years in prison. After beginning his securities career at Merrill Lynch in 1979, Mr. Hafen worked at several firms before joining Bear Stearns in 1999. He joined Morgan Stanley in 2008 and left in 2018. He was with Wells Fargo a short time.
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The Securities and Exchange Commission has filed civil charges in a separate action.
