WHITE PLAINS, N.Y. (CN) - The co-founder of an investment firm fleeced his clients out of more than $6 million through illegal wire transfers, which he used to buy a "multimillion-dollar mansion," a former client alleges in Westchester County Court.
Patricia Flinn claims that when her husband, William Adcock, was diagnosed with lung cancer, she hired AFW Asset Management to help steer their securities accounts at Charles Schwab.
She describes AFW as a "very small, close-knit operation" run by two longtime friends and former high-school classmates, Jay W. Furst and Matthew D. Weitzman.
Since opening AFW in 1993, Weitzman and Furst managed 300 clients with assets totaling $200 million, according to the complaint.
While Flinn was paying $65,000 in management fees over two years, she claims Weitzman "blatantly stole" $527,000 from their accounts in nine unauthorized transfers.
Between 2005 and 2009, Weitzman allegedly swindled his clients in more than 100 unauthorized transfers from about 20 accounts.
Weitzman and his wife, Susan, lived in a "multimillion-dollar mansion" bought with the money.
Weitzman bilked his clients by sending fraudulent wire instructions with forged signatures on AFW letterhead to Charles Schwab, directing the brokerage to transfer the money to AFW or Weitzman directly.
On one set of instructions for a $100,000 transfer, the lawsuit says, Weitzman forged Adcock's signature 10 days after Adcock's death in December 2008.
Flinn says co-founder Furst should have known about the illegal transfers and had a duty to monitor the company's agents and safeguard clients' money.
Flinn and Adcock are among eight named plaintiffs in an ongoing criminal case against Weitzman, who was arrested in June 2009 on charges of wire and securities fraud. He faces the same charges from the SEC, Flinn says.
She demands restitution and $2 million in punitive damages from AFW, Weitzman, Furst and Weitzman's wife for alleged fraud, conversion, negligence and breach of fiduciary duty.
Her attorney is Steven Gold with Mintz & Gold of Manhattan.
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