A Minnesota monetary advisor was sentenced to 2 1/2 years in jail for defrauding shoppers out of hundreds of thousands, the Division of Justice introduced Thursday.
Along with the 30-month federal jail sentence, a federal choose ordered Kristi Margaret Berge to pay about $2.1 million in restitution. Berge pleaded responsible to wire fraud earlier this 12 months.
In line with the DOJ, Berge was the founder and CEO of Preserve Protected Investments, also referred to as KSI Monetary, which acted as a monetary planning agency. Berge was registered with the SEC underneath KSI Monetary in 2013 earlier than her registration ended on the finish of final 12 months, based on fee information.
Berge additionally co-owned J&Ok Join, which invested in actual property by shopping for, renovating and promoting properties for a revenue, with places of work for all her corporations in Edina, Minn.
However beginning in June 2020 and for practically three years, Berge stole about $2.1 million from a number of shoppers’ accounts by claiming that she’d preserve their cash “in secure and safe funding accounts,” like particular person retirement accounts and 401(okay) plans, based on a felony info doc from earlier this 12 months.
Nevertheless, unbeknownst to her shoppers, Berge repeatedly withdrew shoppers’ funds from their accounts, usually taking between $5,000 and $220,000 out at a time and transferring them to her financial institution accounts.
Berge would then use the cash to buy properties for J&Ok Join and, in some circumstances, use the shopper funds to pay for a property one in all her members of the family used as a residence. She’d typically falsely label these withdrawals as “administration” or “administrative” charges to make it look like they had been a part of common enterprise.
The DOJ was not the one social gathering pursuing Berge over these accusations. Earlier this 12 months, United Airways filed a lawsuit in Minnesota federal court docket towards Berge and her enterprise entities, arguing she “improperly” used worker retirement plan property for “private achieve.”
The go well with describes how United staff can make investments retirement contributions through a self-directed brokerage account referred to as a Private Selection Retirement Account through Charles Schwab and may select to rent an impartial advisor to advise on their funds within the PRCA.
The workers should select an advisor within the Schwab community if the advisor is to cost its charges on to the members’ accounts, they usually can solely withdraw property to pay advisory charges.
Berge was allegedly a type of advisors and entered into contracts with a number of members, based on United. Nevertheless, some staff’ contacts included agreements with J&Ok Join, by which they agreed to mortgage property from their PRCA to the actual property firm.
Particularly, KSI would cost a “administration price” that may “in actuality, be used to fund a mortgage from the participant to J&Ok.” This meant the charges purporting to be for funding recommendation had been actually going to J&Ok, based on the United go well with.
“Via this association, and by falsely representing the quantities to the Plan as charges, Berge, KSI and J&Ok contained management over Plan property to which they weren’t entitled, with the intent to make use of these property for their very own achieve,” the United criticism learn.
In line with United, Schwab found the ruse in December 2022, alerting the airline and Berge that they had been conscious the plan property went to J&Ok and to not Berge as advisory charges and terminated KSI as an funding advisor on Schwab’s platform.
In line with subsequent court docket paperwork, Berge was in default “for failure to plead or in any other case defend” herself towards the fees (by which the court docket dominated in favor of the plaintiff as a result of the defendant failed to reply).
Berge’s attorneys didn’t reply to requests for remark previous to publication, however based on the Minnesota Star Tribune, lawyer Bruce Rivers wrote the court docket asking for a sentence of six months dwelling confinement, writing that Berge had no prior prison historical past and had by no means “got down to harm anybody.”
“Her enterprise took a flip, and he or she made some critical errors alongside the way in which and has each intention to repay those that had been harmed,” Rivers wrote.
