Brentwood financial advisor sentenced for Ponzi scheme
Brentwood Home Page news reports
Former Brentwood financial advisor and owner of A.D. Vallett & Co., LLC, Aaron Donald Vallett, 35, was sentenced Tuesday by United States District Court Judge Todd J. Campbell to 120 months in prison, announced Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee.
The sentence followed Vallett’s guilty plea in July 2012 in which he admitted to orchestrating a multi-million dollar Ponzi scheme involving more than 30 victims, many of whom were family and friends. Vallett was ordered to repay over $5.4 million in restitution to his victims.
The sentence also comes as the Department of Justice kicks off a series of investment fraud summits this week in several cities across the nation, including one in Nashville, which is being held on Thursday at the Vanderbilt School of Law. The summit will feature national experts, including federal law enforcement officials, community leaders, and victims to discuss issues associated with investment fraud schemes and to help educate the investing public on how to avoid falling prey.
“Large cases like these are very serious, in particular for the investors," said Martin. “Mr. Vallett repeatedly encouraged people to invest by falsely promising inflated returns on their money, but instead, the investors lost their savings as part of an elaborate Ponzi scheme.”
Vallett admitted to operating a Ponzi scheme to defraud investors who deposited funds with A. D. Vallett & Co., LLC, for various financial services, including investment advice, portfolio management, insurance, real-estate consulting, and retirement planning. In addition, Vallett & Co. acted as Third Party Administrator for several 401(k) plans. It was through those services, however, that Vallett defrauded numerous clients of more than $5 million dollars. Much of the loss came from investor-clients who placed money in one of Vallett’s investment “funds.” Instead of investing that money as promised, Vallett kept it in his company’s operating account and spent it on various personal and business expenses. In addition, in some cases, Vallett used a portion of the funds to repay older investors, giving them the false impression that the “returns” were from their investment. In reality, those returns were simply money derived from newer investors.
Vallett’s 401(k) advisory clients suffered a similar fate. Because Vallett was the plan administrator for several clients’ 401(k) plans, he had access to their retirement accounts. In that role, he transferred, without authorization, funds from those retirement accounts to his operating account and again spent the money on personal and business expenses. He later attempted to conceal his fraud by lying to securities regulators and falsifying documents.
Before passing sentence, Judge Campbell heard statements from two of the more than 30 victims who described the financial destruction caused by Vallett’s Ponzi scheme.
In sentencing, Judge Campbell found that Vallett’s repeated conduct showed a lack of respect for the law and that Vallett was motivated by “sheer unadulterated greed.” Judge Campbell noted that Vallett wanted “more material things” at the expense of his victims which included family and friends. Judge Campbell further noted that Vallett’s victims had expressed “a strong degree of betrayal” and “broken family relations.”