Consumer Alert: Financial advisor steals millions from clients
The nationwide fraud affected accounts totaling $190 million and Kahler spent the money on himself.
A long-time and trusted financial adviser, decided he wasn't making enough money so he took advantage of his clients by having them write checks directly to him. The clients thought nothing of it, because they trusted him for years. But he was eventually caught.
"He tricked them into giving him this money," says Jeremy Leder, a U.S. Postal Inspector.
Leder is talking about Edward Kahler, a financial adviser who worked for a subsidiary of AIG for more than 20 years.
"He was authorized to sell things like life insurance and annuities to people who are either about to retire or have already retired,"says Leder.
For most of Kahler's career, he was very successful and honest, but then authorities say he changed course.
"At some point, he decided he wasn't making enough money doing what he was doing and decided to start defrauding some of his clients," says Leder.
Having spent decades in the business, Kahler already had a key element necessary to pull off a scam: trust.
"He had many, many years of legitimate business with some of these clients,"says Leder. "When he decided to defraud these people, it was as simple as asking them to write him a check. Every single victim we talked to said "we trusted him,""says Leder.
Kahler's request that clients write their checks out to him should have set off alarms. If a consumer is investing with a firm, any checks or payment would be made to a company, not an individual.
"They would write him checks, large checks, in the amount of $50 to over $200,000," says Leder.
Postal inspectors say the nationwide fraud affected accounts totaling $190 million and Kahler spent the money on himself.
"In reality, he took the money and spent it on lavish expenses, trip to Vegas with his wife, cars, etc," says Leder.
Inspectors say he was brazen.
"He located someone who was deceased, whose annuity had not been cashed out and basically with just a few clicks of a mouse he was able to surrender the account and had a check for over than $100,000 sent to his own PO Box that he controlled," says Leder.
After several complaints were filed, law enforcement quickly caught up with Kahler.
"At no point during our interactions on several occasions did ever admit or say he was sorry for doing what he did," says Leder. "I think he would have continued to do this fraud had we not stepped in and shut him down."
Kahler was convicted of mail and wire fraud charges and could face up to 20 years in federal prison.