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Annapolis

Annapolis broker sanctioned after falsifying investment, fabricating records, federal regulators say

A longtime Annapolis investment advisor falsified records and liquidated securities to maintain a lie that his client had accrued millions of dollars in assets from an investment that never existed, according to market regulators.

Richard M. Crabtree, 57, is barred indefinitely from acting as a broker or investment adviser or associating with traders and owes a $40,000 fine to the U.S. Securities and Exchange Commission after the agency found he had violated several securities laws over a four-year period, from 2016 to 2020, in which he falsified returns on the fake investment, the agency said in a settlement order.

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Crabtree, who was listed as a senior vice president and senior financial advisor for a wealth management group located at Merrill’s Annapolis branch, did not return a call to comment on the matter. He had been a broker at the Annapolis branch of Merrill, formerly Merrill Lynch, since 1988. Crabtree did not admit or deny the SEC’s findings, according to the order.

Merrill is not named in the SEC’s order, which was issued last Friday. A spokesperson for Bank of America, which owns Merrill, confirmed Crabtree no longer works for Merrill and declined to answer further questions.

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Crabtree claimed the misconduct started in 2016 when he mistakenly overstated the value of his client’s assets by $250,000 during a phone call with the client, according to the SEC’s order. Crabtree concealed the overstatement by convincing his client to invest the non-existent $250,000 into an investment partnership, which also didn’t exist.

Crabtree never profited from the misconduct, and never misappropriated funds, according to the SEC.

The falsehoods snowballed as Crabtree e-mailed the client portfolio reports which showed the investment had increased in value, claiming the $250,000 had swelled to over $1.5 million by 2017, according to the SEC’s order. In April 2020, Crabtree texted the client a photo of his computer screen showing the client held $7.7 million in assets when the client actually held just over $856,000.

The next month, in May 2020, Crabtree told the client he was using profits from the fake partnership to pay off the client’s mortgage balances and to purchase stocks, the SEC said. Because the investment didn’t exist, Crabtree used cash from the client’s advisory accounts, and when there was not enough cash, he liquidated securities in the client’s account. Crabtree then provided fake securities receipts and bogus mortgage payoff letters to buoy the lie, according to the SEC.

Crabtree eventually confessed to management in August 2020, when the client started to pressure Crabtree to liquidate the investment and provide the money. Crabtree told Merrill management he had misled the client and covered up the lie for a long time, according to the SEC.

Crabtree then went on medical leave. The SEC report says Crabtree was diagnosed with post-traumatic stress disorder and later dissociative identity disorder.

The SEC ordered Crabtree to be barred from associating with any broker, dealer or investment adviser, and from working for any registered investment company. He was also ordered to pay a $40,000 civil penalty to the SEC.


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