Stockbroker Sentenced In Fraud Case But What's The Over / Under ?

October 15, 2012

English: Question marks with transparent backg...

Exactly how much did this stockbroker steal?

Lori Zoval, 47, South Lake Tahoe, CA, was a licensed securities broker.  Unfortunately, it appears that Zoval believed that not only was she licensed to sell stocks but that she was also licensed to steal.

Over $439,000

On July 06, 2010, a federal grand jury indicted Zoval with wire fraud. Prosecutors alleged that Zoval  reaped over $439,000 from a couple for whom she managed investments, and that she used the stolen funds for her personal benefit at casinos, restaurants, nail salons, as well as to pay for travel, gas, groceries, and other personal expenses. As with most of these rip-offs, Zoval simply fabricated documents to conceal her crimes - going so far as to engage in forgery and to secure notarizations. If convicted of the charges, she faced a maximum statutory penalty of 20 years in prison and a $250,000 fine for each violation.

SIDE BAR: According to online regulatory documents, Zoval was first registered in 1999 with Dean Witter Reynolds and, thereafter, worked at A.G. Edwards & Sons, Inc. (2000-2002); Commonwealth Financial Network (2002-2005) and with Brecek & Young Advisors Inc (May 2005 - June 2006). An online Financial Industry Regulatory Authority document notes that Zoval was "Discharged" on June 16, 2006, by Brecek & Young for:

VIOLATIONS OF INVESTMENT RELATED RULES AND FIRM POLICY. (SELLING AWAY, FAILURE TO COOPERATE).

At Least $24,939

On October 21, 2011, Zoval pleaded guilty to one count of wire fraud for embezzling client money and agreed to pay restitution.

An odd thing happened between the 2010Indictment and the 2011 plea, by the time of the latter, the allegations sort of got toned down.  In a press release announcing the plea, we are told that:

[Z]oval used her position of trust to embezzle at least $24,939 from the investment and retirement accounts of her clients between October 2005 and April 2006. Zoval admitted to stealing funds by explaining to her clients that she was setting up tax shelters that required her to transfer funds into the names of third parties she called "provisional employees." To facilitate the transfer of funds, Zoval fraudulently created documents making it appear that her clients authorized the money transfers. Zoval took steps to lull the victims into believing that she was making legitimate and profitable investments by sending falsified account statements reflecting inflated returns and balances.

Exactly how or why the magnitude of Zoval's theft went from "over $439,000" in 2010 to "at least $24,939" in 2011 isn't explained.

Flip, Flop, Flip-Flop

On October 12, 2012, Zoval was sentenced in the Eastern District of California to three years and eight months in prison and three years of supervised release.  The amount of restitution is awaiting the Court's determination.  Oddly, thepress release flip of 2010 and the subsequent press release flop of 2011 are now flip-flopped yet again with this 2012 press release explanation:

According to court documents, Zoval pleaded guilty to using her position of trust to embezzle at least $24,939 from the investment and retirement accounts of her clients between October 2005 and April 2006. At sentencing, however, the court found that Zoval has stolen more than $430,000 from these clients, a married couple close to retirement. At an earlier hearing, the couple testified to the financial and personal devastation the fraud had caused.

Huh?  So she embezzled at least $24,939 but had stolen over $430,000?

Not to be a stickler for detail or anything but just what the hell is going on with this case? After three years of press releases, an Indictment, a plea, and sentencing, I'm still not quite sure that I understand what Zoval actually did - it seems clear that she committed a crime (or crimes) but the prosecutors' explanations leave much to be desired.