MADISON, Wis. (WEAU) – A former Altoona financial advisor has reached a plea deal in a federal fraud case Monday.
Michael Shillin pleaded guilty to wire fraud and bank fraud as part of the plea arrangement, while eight other counts of wire fraud were dismissed in U.S. District Court, Western District of Wisconsin.
Shillin was indicted on nine counts of fraud by wire, radio or television and one count of bank fraud. According to the federal indictment, Shillin’s company managed nearly 3,000 accounts and more than $135 million and engaged in a scheme to defraud clients, and investigators said he falsely told clients he made them hundreds of thousands of dollars by purchasing stock in companies, which the Securities and Exchange Commission said was a lie.
The charges were brought by the Securities and Exchange Commission on Sept. 23, 2021, after former clients said Shillin defrauded them. In the filing, investigators said Shillin, while acting as a financial advisor, fabricated documents and lied to clients about the true value of their investments. In addition to claims of defrauding clients by taking money to make non-existent investments, he was also paid hundred of thousands of dollars in commissions for the work he claimed to do on his clients’ behalf. The claims made by the SEC accuse Shillin of defrauding at least 100 clients. The indictment also charges Shillin with defrauding a bank by taking out more than $450,000 in loans using a client’s banking information.
The SEC complaint said, “In the course of selling a life insurance policy, told his [Shillin’s] client it contained a long-term care benefit. The client, now suffering from stage IV cancer, learned there was no such policy or benefit only after his diagnosis.” For one of Shillin’s investment clients, the SEC said the reality of Shillin’s betrayal did not come until after he made the decision to retire early—after Shillin claimed the man was “$450,000 richer.” Shillin had explained the money was the profits from Shillin’s purchase of Space Exploration Technologies Corp. or “SpaceX” stock for the client. Only later did the investor learn the truth: The SpaceX stock and the resulting nest egg were figments of Shillin’s deception.”
The filing added, “These are only two examples of Shillin’s myriad lies and the resulting suffering they have caused so many of his clients. Shillin went to great lengths to deceive his clients. He even set up an online portal for his clients to monitor their portfolio of securities and profits – much of which, as we now know, were pretend.”
Investigators claim Shillin started misleading clients in 2014 when he worked for another financial advising firm. One of the misleading actions came in 2018 when Shillin was terminated from the firm and according to the filing, “He falsely told clients that his departure was voluntary. Many clients would have fired him had they known the truth, and thus would have refused to continue paying him advisory fees.”
If found guilty of the charges brought by the SEC Shillin faces being barred from certain positions that deal with securities; repaying the clients he is accused of defrauding and/or face civil penalties. Shillin pleaded not guilty to all of the charges on Nov. 4, 2021.
Shillin was detained ahead of the trial after U.S. Customs and Border Protection stopped him at the Cyril E. King International Airport in St. Thomas of the U.S. Virgin Islands on April 9, according to court documents filed with the case.
The terms of Shillin’s probation included a condition that he wasn’t able to travel outside of the jurisdiction of the federal court except for day trips to visit relatives and lawyers anywhere in the state of Wisconsin. Any other trip would require pre-approval from pre-trial services.
On March 29, Shillin said he was invited by his employer to present at a conference in Antigua and was being pressured by his employer to go as one of the company’s top performers in 2021. A U.S. Pretrial Services and Probation officer told Shillin that travel abroad was not something his office could approve and that Shillin would need to motion the court. The next day, Shillin’s lawyer asked both the probation officer and Assistant U.S. Attorney if either would approve Shillin’s request and both said they would deny it. On April 1, Shillin told his lawyer and the probation officer that his employer agreed to let his girlfriend make the trip instead to attend events and asked if there would be any issue with her using their joint checking account while traveling abroad.
Shillin told the probation officer he had received $2,000 in airfare credit and a $1,800 bonus from his employer that was deposited into his bank account, which was given to him instead of attending the conference in Antigua. He said that he used the funds to pay for his travel to St. Thomas, where he stayed five nights at a resort with his girlfriend, but the probation officer did not verify the claim, according to court documents filed with the court summons on Monday.
As a result of violating the probation condition, Shillin was detained ahead of his court appearance Monday.
Shillin is scheduled to be sentenced on the two remaining charges on August 25. Shillin faces a maximum penalty of 20 years in prison for wire fraud and 30 years in prison for bank fraud.
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