*A person who benefits from a spouse’s theft must return those monies to a disgorgement fund, even if such person was unaware of the theft. **Where funds stolen from clients were commingled with the thief’s family expenses, the funds must be disgorged and the thief’s unwitting spouse can only get credit for the spouse’s contributions to family expenses that are proven specifically.
SEC vs. Camarco, No. 17-2027 (D. Colo., 4/8/19).
Sonya Camarco, a financial advisor at LPL, pleaded guilty to violating the federal securities laws as a consequence of stealing over $2 million from her clients. She was sentenced to 20 years in prison and ordered to disgorge the funds that she stole. Some of the funds were reimbursed to the clients by LPL and the net amount that she was required to disgorge was $1,636,855. At the time of her sentencing, Sonya Camarco had no assets and so the SEC sought recovery from recipients of the funds that she stole, primarily her husband Paul, individually and as a co-beneficiary of a living trust with his wife.
A hearing was held to determine Paul’s obligation to the defrauded clients. Paul testified that he was unaware of his wife’s thefts and that the funds she delivered to the trust were commingled with his own funds and that he paid some of the family expenses out of his pocket. The Court accepted Paul’s claim that he was not aware of the thefts, but also notes that its primary concern was reimbursing clients. Paul was unable to determine the precise amount of the funds that he had contributed to the trust or the precise amount that he spent on family expenses, except for $38,000 used as a down payment on the couples’ first home. That home was sold at a profit and the proceeds were used to purchase their current home (the Woodhaven property), which Paul had agreed to sell and contribute at least part of the proceeds to the disgorgement fund.
The SEC, on the other hand, agreed that 50% of the proceeds from the sale of the Woodhaven property would be applied to the disgorgement fund and that 50% could be allocated to Paul. There was also evidence that Paul had benefitted from funds paid on his behalf in the amount of $109,927 by a now defunct corporation, which was an alter ego for Sonya. The couple also owned four rental properties, which Paul conceded were purchased with stolen funds. These properties were to be sold and the proceeds were to be used to reduce Sonya’s obligation to the clients. The Court requires Paul to pay $109,927 to the disgorgement fund.
With respect to his monetary contributions to the family finances, the amount that Paul contributed was unknown, except for the $38,000. It was not clear whether the proceeds of the sale of this home went into the purchase of the Woodhaven property. The Court was willing to give Paul credit for his contributions. However, because there was no other basis in the record to measure Paul’s contributions, the Court orders that he be paid $38,000 from the proceeds of the sale of the rental properties. It also orders that he be paid 50% of the proceeds from the sale of the Woodhaven property, less the $109,927 paid on his behalf from his wife’s corporation.
(SOLA Ref. No. 2019-21-05)
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