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Regulation and Compliance > Litigation

Ex-Broker Sentenced to Over 4 Years in Prison for Elder Fraud

By Jeff Berman

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What You Need to Know

  • The former broker had pleaded guilty to financial fraud by bilking at least three older clients out of over $950,000.
  • The ex-rep was also ordered by the judge to pay over $968,000 in restitution to his victims.
  • He worked for Morgan Stanley before the fraud was committed.

A former broker who was charged last year with financial fraud by bilking at least three older clients out of over $950,000 has been sentenced to four years and four months in federal prison, according to court documents and the Department of Justice.

In addition to the prison sentence, U.S. District Judge Iain D. Johnston on Wednesday ordered former Loves Park, Illinois, broker Naseem Mohammed Salamah, 41, to pay restitution to the victims of $968,582.12 and two years of supervised release after his sentence is completed.

Salamah previously pleaded guilty to fraudulently obtaining a total of more than $968,000 from the accounts of at least three clients.

The DOJ had alleged that, from at least as early as August 2017 and continuing to May 2021, he “knowingly devised, intended to devise, and participated in a scheme to defraud three of his clients.”

The rep told the clients he needed to move the money to diversify their assets when, in fact, Salamah instead deposited the funds into a bank account that he controlled, according to John R. Lausch Jr., U.S. attorney for the Northern District of Illinois.

Salamah then used the money for his own benefit and without the clients’ knowledge or consent, Lausch alleged in the felony information he filed with the court on Sept. 28.

“Naseem is very sorry for what he’s done,” Howard Rosenburg, a partner at the law firm Kopecky Schumacher Rosenburg in Chicago who has been representing Salamah, told ThinkAdvisor by email on Monday. “He’s made a serious commitment to making amends and getting his life back on track,” according to Rosenburg.

Funds Spent on Vacations, Luxury Cars

The Securities and Exchange Commission filed a separate civil enforcement action against Salamah, making similar allegations, on Sept. 28 in the same court as the DOJ action.

As alleged in the SEC complaint, Salamah chose the three clients as his victims because he did not think they would pay close attention to their brokerage account statements.

The complaint alleged he altered authorization forms and forged the signature of his firm’s chief compliance officer to transfer the clients’ funds to a bank account he controlled.

Salamah used the money for personal expenses, including vacations, luxury cars and private school tuition, the SEC alleged.

Morgan Stanley Dispute

Salamah was a registered broker with Morgan Stanley from August 2010 to February 2013, according to his report on FINRA’s BrokerCheck website, which didn’t specify why he left the firm.

Morgan Stanley filed a complaint against Salamah in the same Illinois court on May 9, 2014, alleging that he failed to pay the firm back for money owed on promissory notes despite a FINRA arbitration panel ordering him to pay Morgan Stanley $167,076 including interest, legal fees and other costs in September 2013.

(Morgan Stanley did not immediately respond to a request for comment on Monday._

Salamah has not been a registered broker with any FINRA-affiliated firms since leaving Morgan Stanley, according to BrokerCheck.

But from January 2013 to June 2021, Salamah was an investment advisor representative with a then-state-registered investment advisor. He operated a branch office for the firm in Loves Park and was the sole representative of the branch, according to the SEC complaint.

The SEC complaint did not name the firm, but it is identified as NinePoint Advisors on his BrokerCheck report. On June 29, 2021, Salamah’s employment with that firm was terminated, according to the complaint, which does not state a reason for his dismissal.

(Image: Shutterstock)

Jeff Berman

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