A former Greenville broker accused of stealing from his clients in a long-running Ponzi scam has been indicted on federal wire fraud charges.
Claus C. Foerster, 55, of Spartanburg, defrauded clients of about $2.8 million while employed as a financial adviser at Morgan Keegan & Co. and Raymond James Financial Inc. in Greenville, according to a five-count indictment handed down in federal court Tuesday.
Between 2000 and 2014, the indictment alleges Foerster advised clients to put their money into SG Investment Management, a company that was "totally fictitious" and "created solely by the Defendant solely to further his scheme to defraud."
Foerster had clients move cash from their brokerage accounts to their bank accounts and then write checks payable to SG Investments, the indictment alleges.
The indictment also alleges Foerster would provide his investors with "totally bogus earning statements" that he created or would return a portion of the obtained funds to some clients to make it look like their funds were actually invested and earning profits.
The Financial Industry Regulatory Authority permanently barred Foerster from the industry in June 2014.
According to FIRA, Foerster was a registered broker at J.C. Bradford & Co. in New York City before working for Citigroup Global Markets Inc. in Spartanburg from 1997 to 2008 and Morgan Keegan & Co. in Greenville from 2008 to 2013.
Foerster was terminated from Raymond James & Associates on June 3, 2014, FIRA said.
The maximum penalty Foerster could receive for each count of wire fraud is 20 years imprisonment and a maximum fine of $250,000, according to the U.S. Attorney District of South Carolina's Office.
The case was investigated by the U.S. Secret Service and is assigned to Assistant U.S. Attorney David C. Stephens of the Greenville office for prosecution.