Home St. Louis Press Releases 2011 Former Woodbury Financial Services Representative Along with a Coral Mortgage Operator Plead Guilty to...
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Former Woodbury Financial Services Representative Along with a Coral Mortgage Operator Plead Guilty to Multi-Million-Dollar Securities Fraud

U.S. Attorney's Office April 29, 2011
  • Eastern District of Missouri

ST. LOUIS—The United States Attorney’s Office announced the guilty pleas of Joshua Gould, a former financial representative with Woodbury Financial Services, Inc. and affiliate of Spetner Associates; and David Rubin, employee and operator of two local offices of Coral Mortgage Bankers Corporation.

According to court documents, between May 2007 and December 31, 2010, Gould and Rubin embezzled approximately $1,500,000 from a retired individual solicited by Rubin to provide funds for operating capital for Coral’s St. Louis operations. The individual was assured that the funds would not be spent, would be held in a secure trust account, used only as collateral for Coral’s operations, and that the individual would receive regular interest payments. Between May 2007 and December 2008, the client provided Rubin approximately $1,200,000 from his and his wife’s life savings. Despite his representations that the funds would not be spent, Rubin used approximately $250,000 of the funds for operating expenses, including payment of his own salary. Rubin transferred the balance of the funds to Gould. Gould used those funds for personal expenses including car payments, mortgage payments, payment of substantial personal credit card bills, the renovation of his personal residence, jewelry, and adult entertainment, including substantial expenses at the Penthouse Club and PT’s. Gould also used the money to finance start-up costs and operational costs of several business ventures including The Sports Nook, True Hockey, and Free Poker Experience. Gould and Rubin prepared and gave the individual victim false account statements, including statements falsely representing to the victim that as of September 30, 2010, he had $1,126,365 in his Investment Fund and $217,123 in his Family Charity Fund, when in fact all of the funds had been embezzled, diverted and stolen by Gould and Rubin.

In addition, Gould embezzled approximately $3,500,000 from numerous brokerage clients as well as the beneficiaries of the RARJI Trust. These brokerage clients were, for the most part, senior citizens and retirees. In his position as head of Spetner Associates’ Financial Services Division, Gould solicited clients of the Spetner Associates insurance agency to move their investment portfolios and retirement accounts from other brokerages to his management. According to the indictment, on multiple occasions, Gould processed trades and the redemption of securities held in client accounts and accounts of the RARJI Trust without the knowledge, approval, and authorization of the account holders, and had the proceeds transferred into his own personal bank accounts. Also, as part of the scheme, Gould falsely represented to his clients that Pacific Mutual Alliance, LLC and Apex Alliance LLC were legitimate investment securities, when they were actually shell companies that he had established and controlled.

Gould used the stolen, diverted and embezzled funds for personal expenses including car payments, mortgage payments, payment of substantial personal credit card bills, the renovation of his personal residence, jewelry, and adult entertainment including substantial expenses at the Penthouse Club and PT’s. Gould also used the money to finance start up costs and operational costs of several business ventures including The Sports Nook, True Hockey and Free Poker Experience. Gould also engaged in a Ponzi type scheme by using client funds to pay off other clients’ trade requests after he had liquidated their securities without their knowledge.

Gould, 32, University City, Missouri, pled guilty to one felony count of wire fraud and one felony count of mail fraud; Rubin, 47, Chesterfield, Missouri, pled guilty to one felony count of wire fraud. Both defendants appeared before United States District Judge Rodney W. Sippel.

Sentencing for both defendants has been set for July 22, 2011.

Additionally, the defendants are subject to a forfeiture allegation, which will require them to forfeit to the government all money derived from their illegal activity.

Each count of the indictment carries a maximum penalty of 20 years in prison and/or fines up to $250,000. In determining the actual sentences, a judge is required to consider in an advisory capacity the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.

This case was investigated by the Federal Bureau of Investigation, the Postal Inspection Service, and the United States Secret Service. Assistant United States Attorney Hal Goldsmith is handling the case for the U.S. Attorney’s Office.

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