An Acton financial adviser and insurance agent has been sentenced to federal prison for stealing $3.8 million from brokerage accounts, insurance policies, and annuities he controlled or managed for clients for over twenty years
Last Tuesday, a federal judge in Boston sentenced Gerald Allan Eaton, 51, to a term of imprisonment of 102 months plus three (3) years of supervised release and ordered restitution in the amount of $3,824,930.41 plus prejudgment interest of $1,698,701.62.
A successful financial planning and insurance business not enough for Mr. Eaton
Mr. Eaton started as a financial planner in 1992, and by 1999, he was earning close to $300,000 per year.
He operated his business under the name Heritage Financial Group, with an office in Acton. Mr. Eaton invested his two hundred clients’ funds in securities and various insurance products, including life insurance policies and annuities.
Notwithstanding his apparent success, beginning in August 1999, Mr. Eaton started to steal money from the investment accounts and insurance policies that he controlled and managed on behalf of his clients.
Mr. Eaton forged client signatures on checks and other documents to enable him to misappropriate their funds. He induced clients to sign documents liquidating securities and transferring funds by falsely representing that the transactions were for the clients’ benefit.
Mr. Eaton’s defalcations continued for twenty years
Mr. Eaton carried on his fraudulent scheme, juggling accounts and falsifying documents for over twenty years. He avoided detection by choosing the clients he would defraud from those who were the least likely to notice his embezzlement. These were his clients who were elderly or in poor mental or physical condition. Mr. Eaton used the money stolen from his clients to pay his personal and family expenses and mortgage.
In October 2019, after receiving complaints and conducting an investigation, the brokerage firm that he was affiliated with terminated their relationship and reported the termination to FINRA. In making the report to FINRA, the security brokerage licensing group, the brokerage firm stated that Mr. Eaton was “Discharged” for “Forgery, wrongful taking of property. the termination occurred because that Mr. Eaton had “fraudulently facilitated distributions from clients’ accounts without their knowledge or consent or for their benefit.”
Based on the brokerage firm’s report, FINRA, which licenses security brokers, requested information from Mr. Eaton and then indefinitely barred him from working as a broker based on his admission he would not cooperate in the investigation of his alleged conversions of his various clients’ property.
In September 2020, the Securities and Exchange Commission entered an order barring Mr. Eaton from the securities industry for life based on his client conversion.
Federal prosecutors file information and Mr. Eaton pleads guilty
On September 1, 2020, the United States Attorney filed a three-count criminal information charging Mr. Eaton with fraud, mail fraud, and aggravated identity theft. In the Federal system, the filing of an information instead of presenting evidence to a grand jury to indict usually means the defendant has agreed to plead guilty.
On September 30, 2020, Mr. Eaton pleaded guilty to each count in the information.
The charges of mail and wire fraud provided for a sentence of up to 20 years in prison, three years of supervised release, and a $250,000 fine or twice the gross gain/loss, whichever is greater. The charge of aggravated identity theft provided a mandatory sentence of two years in prison to be served consecutive to any other sentence imposed, one year of supervised release, a fine of $250,000, and restitution.
Although restitution paid, prosecutor asks the judge for a ten-year sentence
The U.S. Attorney recommended that the sentencing judge impose a prison sentence of 121 months, citing in their sentencing memorandum:
- Mr. Eaton’s crimes involved “a sustained pattern of criminal conduct and concealment, which makes it inherently more serious.”
- His crimes had serious consequences for his victims.
- He made a very good living before stealing any money from his clients ($270,000-$310,000 per year), and there was no need for him to commit this or any other crime.
- Mr. Eaton knew that what he was doing and knew that his actions were causing millions in losses to his victims – some of whom would die and never find out about his theft.
- Mr. Eaton demonstrated disrespect for the law and the criminal justice system, which, if left unpunished, promotes and encourages others to follow suit.
Mr. Eaton’s twenty-five-page sentencing memorandum recognized his crimes’ seriousness but presented numerous statements from family and friends concerning his character and compassion outside of his proclivity to breach his clients’ trusts for personal gain.
Mr. Eaton’s memorandum also emphasized that the Federal sentencing guidelines did not give credit for his making $3.8 million in restitution, stating that:
“The [federal sentencing] guideline calculation does not consider that Jerry repaid every dollar he stole from his clients –$3,823,493.69. He pleaded guilty, cooperated with the government when the investigation began and has never equivocated about making sure he could pay restitution to his former clients. Through the efforts of Jerry and his ex-wife, Jerry has been able to pay back every dollar he stole.” (Emphasis in original).
Mr. Eaton’s lawyer urged the judge to impose a five-year sentence to serve.
After reviewing a presentence report and hearing from the lawyers, Mr. Eaton and two of Mr. Eaton’s victims, the Court imposed a final sentence nineteen months less than the one hundred and twenty-one months the government requested but 42 months more than the sixty months Mr. Easton’s lawyer had argued for the Court to impose
Mr. Eaton must serve at least 7.4 years of his 8.5 year sentence starting July 15, 2021
The sentencing judge allowed Mr. Eaton until July 15, 2021, to self-report to the Bureau of Prisons to begin serving his sentence.
By law, a federal prisoner who is serving a term of imprisonment of more than one (1) year may receive credit for Good Time, the time served with no violations of the prison’s rules, of fifty-four days per year against their sentence.
Assuming Mr. Eaton avoids trouble in prison, he could be released after he serves a little more than 7.4 years of his 8.5-year sentence.
Federal Officials involved in Mr. Eaton’s prosecution
The federal officials who announced Mr. Eaton’s sentencing were Acting United States Attorney Nathaniel R. Mendell and Joseph W. Cronin, Inspector in Charge of the U.S. Postal Inspection Service.
Assistant U. S. Attorney Jordi de Llano, Deputy Chief of Lelling’s Securities, Financial & Cyber Fraud Unit, prosecuted the case.