A former Morgan Stanley advisor faces up to 30 years in prison after pleading guilty to defrauding clients of $7 million, according to the Department of Justice.
Shawn Edward Good pleaded guilty in North Carolina federal court to counts of wire fraud and money laundering for running the scheme, after being charged by the DOJ earlier this year. (He also faced similar charges from the Securities and Exchange Commission in April.)
“This investment advisor breached the trust of at least a dozen clients, taking over $7 million—money he promised would go to low-risk investments—and used it to line his pockets, buying real estate, luxury cars and vacations,” U.S. Attorney Michael Easley said. “This decade-long scam has finally come to an end.”
Good worked as a registered rep and investment advisor representative for Morgan Stanley from 2012 to 2022, and with Wells Fargo and Charles Schwab prior to that, according to his BrokerCheck profile.
Starting in 2012, Good began running a Ponzi scheme on a number of his clients by soliciting investments for purported real estate projects and municipal bonds. According to the SEC’s complaint, he told clients the investments were low-risk and would offer returns as high as 10% over three to six months.
To complete the investments, Good convinced clients to access liquid asset lines of credit backed by their Morgan Stanley accounts, and would direct them to transfer those funds into their own personal bank accounts and then into his own personal account, according to the DOJ.
However, Good didn’t use the money to invest in the real estate or bonds, but instead he used new investors’ funds to repay previous investors; in 2020 and 2021 alone, he used about $1.6 million of new funds to pay back investors, according to the SEC.
He also used the funds for personal expenses, including payments on his house in Wilmington, N.C., as well as a Florida condo, cars that included a Mercedes Benz, a Porsche Boxster, a Tesla, an Alpha Romero Stelvio and a Lexus, as well as vacations to Paris, Italy, Wyoming and Las Vegas, according to the Justice Department.
There were also more than $110,000 in Venmo payments, with memo lines including “because youre sexy (sic), “tattoo,” and “Hotel for Destiny,” among others, according to the SEC complaint from April.
One of Good’s Morgan Stanley clients was a divorced mother of two kids who’d received nearly $2 million from a divorce settlement, and worked with him to invest it, according to the SEC. In February, the client recorded two calls with him, in which he said he was working on returning her funds.
“In addition, Good discouraged (the investor) from contacting law enforcement and from hiring a lawyer, who Good said would start ‘digging around’ and thus ‘hamstring’ Good’s efforts to redeem the supposed investments,” the SEC complaint read.
Morgan Stanley declined to comment, but according to the SEC, the firm fired Good in February after he’d refused to cooperate with an internal investigation about the purported scheme.