Your Business
When it happens in your own town, you notice it. Shawn Edward Good, a financial advisor with Morgan Stanley, didn’t tell the truth. Now he is facing the consequences—up to 30 years in prison for wire fraud and money laundering.
A 55-year-old North Carolinian, Mr. Good represented Morgan Stanley Smith Barney, LLC for ten years at its local Wilmington office until he was fired in February 2022 for not cooperating with an internal investigation. It was a serious situation then, but when the full story of his financial fraud became known several months later, it was much worse than anyone had previously suspected.
Since 2012, Good had executed a $7,200,000 Ponzi scheme based on false statements and misrepresentations to his trusting clients.
After 31 years in the financial industry with Morgan Stanley, Wells Fargo and Charles Schwab, he had become the subject of investigations by the IRS, the SEC, the NC Bureau of Investigation, the U.S. District Attorney and the Financial Industry Regulatory Authority (FINRA).
Shawn Good preyed on novice Morgan Stanley investors, promising unusually high interest rates on short term “low-risk” investments.
He instructed clients to draw down their Morgan Stanley accounts and credit lines and deposit the money in their personal bank accounts. Then they were told to transfer those funds to a “business” account, which was in reality Good’s personal bank account.
Instead of investing their life savings as promised, he used the money to cover his $800,000 credit card debt and $100,000 Venmo payments. In addition, he expanded his home, purchased a condo in Florida, bought high-end cars (a Tesla, Porsche Boxer, Alfa Romeo Stelvio and Lexus RX350), and took luxury vacations in France, Italy and Las Vegas.
His victims included a single mother with two children and her 69-year-old mother, a blue-collar retiree and a retired violin teacher, all with limited investment experience.
Fraudulent activity like this is rare among financial advisers. This case certainly doesn’t match Bernie Madoff’s $65 billion Ponzi scheme, but it is especially shocking when it happens on Main Street America to people whom you might pass in the aisles of your local grocery store.
An unfortunate side of human nature is that some of us like the idea of getting something for nothing; that’s a weakness that fraudsters prey on. We also envy friends who brag on the golf course or in social situations about their great investments, but we seldom hear about their losers. A little advice:
- When you select a financial adviser, do your own research. Don’t just trust the casual recommendations of others.
- Deal with a reputable financial institution where you can easily check for client complaints.
- Don’t let anyone invest your hard-earned money without your specific agreement to each transaction.
- Avoid advisers who “churn”ac- counts, or who encourage you when the market drops to “sell everything.”
- If you see something suspicious, stop working with that person immediately and file a complaint; don’t fall for their justification story.
- Remind yourself once in a while that “if it seems to be too good to be true, it probably is.”
Jack Goodhue, management coach, can be reached at goodhue@aol.com