A Fair Oaks investment adviser has been sentenced to four years and nine months in prison in connection with a ponzi scheme that involved stealing money from clients' retirement accounts.
Thomas Brown Hammond, 63, was sentenced today by U.S. District Judge John A. Mendez, who also ordered Hammond to pay $536,521 in restitution to his victims. Hammond pleaded guilty in January to embezzling money from employee retirement accounts, according to a federal Department of Justice news release.
Hammond was a registered securities representative and investment adviser who worked in Fair Oaks. According to court documents, from December 2010 through Feb. 23, 2011, he began stealing money from his clients' retirement and investment accounts. Some of this money came from employee benefit plans and employee pension benefit plans.
According to court documents, Hammond advised new and existing clients to invest money in a "private portfolio" that he maintained. He told his clients that his portfolio earned a steady interest rate that exceeded the rate that the clients were earning in their current investments. Hammond, however, took the money that the clients gave him to invest in the fraudulent private portfolio and deposited it into a standard business account at American River Bank. He then withdrew this money and used it for his personal expenses.
Hammond did not provide regular documentation to his defrauded clients showing the status of the money that they thought they had invested in the private portfolio, according to court documents. When asked, he sometimes provided bogus updates of the clients' investment, either orally or through false one-page account summaries.
When one client asked to cash out $58,000 that the client had invested, Hammond said the individual would have to wait seven days before the money would be available. One week later, Hammond returned $48,000 to the client. Officials said that money had been stolen from a second victim.