The Securities Arbitration Law Firm of KlaymanToskes announced today that it is investigating claims on behalf of former customers of Thomas E. Kelly. Kelly first became registered in the securities industry in March 1985. Before becoming associated with M&T Securities in September 1999, Kelly was registered with three other member firms. Kelly became associated with M&T when M&T acquired a branch of Kelly’s previous member firm, Chase Investment Services Corp. Kelly was registered as a General Services Representative until M&T terminated his employment on or about November 17, 2010. Since November 17, 2010, Kelly has not been associated with a FINRA member firm.
According to the FBI, Kelly pled guilty in United States District Court to the felony crime of mail fraud. In his plea before Senior United States District Court Judge Thomas J. McAvoy, Kelly admitted that for a period of at least 15 years, ending in November of 2010, he perpetrated a scheme to defraud and obtain money by false and fraudulent pretenses, representations, and promises, and used the United States mail in furtherance of his scheme to defraud.
During the years of the fraud, Kelly was employed as a financial consultant by a number of banks located in the Binghamton, New York area, including M&T Securities. In his position as financial consultant, Kelly recommended that clients sell off legitimate securities investments in order to invest in a fictitious entity Kelly called Seneca Group. Kelly promised investors with Seneca Group a stable, secure investment. Over the years of the fraud, at least 19 individuals invested in Seneca Group due to Kelly’s recommendation. The amount of loss to investors as a result of Kelly’s scheme is almost $1,000,000.
Kelly fabricated and sent by U.S. mail numerous statements to investors on a quarterly and annual basis, purportedly from Seneca Group, which falsely reported to investors the current worth of their investments in Seneca Group. Many of the statements from Seneca Group to investors indicated investments with Seneca Group were FDIC insured, which was untrue.
Kelly used money invested with Seneca Group to, among other things, make risky investments in the stock market and pay some of Kelly’s personal expenses. Kelly also took steps to conceal his connection to Seneca Group from investors, and to convince investors that Seneca Group was a legitimate investment. For example, Kelly opened a bank account in the name of Seneca Group, and moved the account from one financial institution to another. Kelly also opened a Post Office box in New Jersey which he used as an address for the fictitious Seneca Group, and to which investors could send correspondence intended for Seneca Group. In addition, Kelly obtained a toll-free 800-number, which was used by investors to leave messages for Seneca Group.
Kelly was eventually sentenced for the Ponzi investment scheme in July 2012 to a term of imprisonment of four years and three months in connection with his previously entered plea of guilty to the felony crime of mail fraud. In addition, United States District Court Judge Norman Mordue imposed a term of five years’ supervised release, which will follow completion of Kelly’s prison sentence.
If you sustained losses by investing with Thomas E. Kelly, you may be able to file a lawsuit against M&T Securities to recover your losses. Under FINRA Rules, M&T was obligated to properly supervise the activities of Kelly during the time he was registered with M&T. Accordingly, M&T may be liable for failing to supervise Kelly’s activities while registered at the firm, and could potentially be responsible for compensating customers of Kelly for their losses.
To determine if you are eligible to file a claim, and to discuss the differences between securities arbitration and class action, please contact one of our securities attorneys for a free consultation.