Senior citizens in Erie County, New York, who were defrauded by an unscrupulous financial planner will benefit from a legal recovery of more than $1.1 million.
According to New York Attorney General Eliot Spitzer, the recovery is the result of an agreement with several local financial institutions and follows the prosecution of Randall Cedrik, 43, an Angola-based financial planner.
Cedrik was accused of taking advantage of elderly, widowed and disabled clients as part of a scheme to sell various securities. He pleaded guilty to criminal charges relating to the scam in January, and will be sentenced in Erie County Court on March 18th to 1 to 3 years in state prison.
Under the agreement, the Brian O'Mara Agency, John Hancock Insurance and venture capitalist Robert Logel have provided funds to compensate consumers. Cedrik was affiliated with these companies at various times.
In addition, Key Bank has forgiven home equity loans secured by two of the victims at Cedrik's urging in order to provide funding for the fraudulent investments. The companies were not implicated in any wrongdoing, but nevertheless agreed to provide funds to compensate the consumers harmed by Cedrik's actions.
"These investors are fortunate in that the bulk of their retirement funds are being returned to them - thanks to the responsible actions of several local companies," Spitzer said. "In many cases, however, assets are lost to fraud or risky investments. It is critical that seniors and all investors exercise caution in financial planning."
Starting in November 1996, Cedrik began selling insurance products and annuities, mostly to elderly consumers in Western New York. After fours years, Cedrik stopped selling insurance, and launched his own business, Global Asset Consulting, LLC, which he promoted as a money management business.
Cedrik approached the elderly consumers to whom he had sold annuities and persuaded them to liquidate their retirement holdings and invest in his new business. In at least two cases, Cedrik talked elderly widows into mortgaging their homes and giving him the proceeds. Cedrik also promised his clients a return of 8.25 percent on their investments and partial ownership of his company. However, Cedrik later lost the money on risky investments.
In the criminal case Cedrik pleaded guilty in January to the following charges: Grand Larceny in the Third Degree, a class "D" felony; Scheme to Defraud in the First Degree, a class "E" felony; and Fraud in the Sale of Securities, a Class "E" felony.
During his criminal plea, Cedrik admitted that he made false representations to convince several elderly people to invest vast sums of their savings in his company, Global Assets Consulting.
In a civil court order signed by Hon. John A. Michalek, Justice of the Supreme Court, Erie County, Cedrik was banned from estate planning and selling or offering for sale securities, insurance products, or other financial instruments.
