Morristown Financial Advisor Scammed Investors: Prosecutor

MORRISTOWN, NJ - A Morristown investment adviser must pay $750,000 in civil penalties for selling more than $12 million of unregistered securities in New Jersey, including investments tied to Ponzi schemes and other fraudulent investment scams, according to authorities.

Gary Scheer, managing member and sole investment adviser representative of Retirement Financial Advisors, LLC in Morristown, recommended and sold unregistered securities in seven different investments to at least 50 investors from 2010 through 2018, officials said. The sales generated more than $600,000 in commissions for Scheer.

Six of the seven investments Scheer recommended ultimately were determined by federal and/or state authorities to be fraudulent. As a result of Scheer’s conduct, investors were defrauded of their hard-earned savings, officials said.

In the Summary Penalty and Revocation Order issued by the Bureau today, the Bureau Chief found that Scheer breached his fiduciary duty and violated the New Jersey Securities Law.

“Investment advisers are expected to serve the interests of their customers with undivided loyalty, and not exploit them for financial gain,” said Attorney General Gurbir Grewal. “We will not allow unscrupulous professionals to undermine the integrity of New Jersey’s financial industry by enriching themselves at the financial expense of their customers.”

Scheer recommended and sold the unregistered securities while working as a representative for several investment advisers over an eight year period. The underlying investments in the unregistered securities included franchises, pension income streams, real estate development, and mortgages, officials said.

To date, all but one of the unregistered securities have been identified as investment frauds.

• sold unregistered securities;
• acted as an unregistered agent in the sale of those securities;
• omitted or made material misrepresentations of the risks associated with the investments;
• breached his fiduciary duty by failing to conduct adequate due diligence before making the investment recommendations; and
• breached his fiduciary duty by failing to disclose significant conflicts of interest that were created by virtue of the undisclosed commissions being paid to him.

The Bureau is charged with protecting investors from investment fraud and regulating the securities industry in New Jersey. Investors can obtain information, including the registration status and disciplinary history, of any financial professional doing business to or from New Jersey, by contracting the Bureau toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at 973-504-3600, or by visiting the Bureau's website. Investors can also contact the Bureau for assistance or to raise issues or complaints about New Jersey-based financial professionals or investments.

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