CEO Pleads Guilty to Fraud, Failing to Pay 401(k) Contributions

The CEO of New York-based financial advisory firm The Maddox Group has pled guilty to two counts of wire fraud and one count of making a false statement to the IRS for defrauding clients and failing to pay contributions made by his employees to the firm’s 401(k) plan. 

According to the U.S. Attorney’s Office for the Southern District of New York, Belardino started a retirement savings plan on behalf of the Maddox Group employees, effective at the beginning of 2020 and served as the trustee of the plan. He pled guilty to failing to deposit a little over $8,000 into the plan’s trust account that he had withheld from the paychecks of the four Maddox employees other than himself who participated in the plan.  

The U.S. Attorney’s office said Belardino instead converted the funds meant for the 401(k) plan for his personal use and for the company’s use. And the charge of making a false statement to the IRS stems from Belardino authorizing the retirement plan administrator to file an IRS form in which he falsely answered that there was no failure to transmit to the plan any participant contributions.

Belardino also pled guilty to embezzling more than $313, 000 from one his clients. According to an unsealed indictment, Belardino had managed the client’s investments at another firm before he founded Maddox in July 2019. That following month, he convinced the client to liquidate some of her portfolio and transfer the funds to Maddox to invest. However, the indictment said that instead of investing the client’s money, he used it to pay his company’s operating expenses, including payroll and office rent, personal travel and personal credit card charges.

The indictment said that the client instructed Belardino to transfer her portfolio at Maddox to another firm; however, despite telling the client and her family members he was liquidating the portfolio and would return the funds shortly, the client never received any funds by wire, and the checks Belardino had deposited were returned due to insufficient funds.

Belardino also pled guilty to obtaining fraudulent life insurance commissions. According to U.S. Attorney’s office, Belardino served as the agent for an unnamed insurance company in connection with an application by another client for a life insurance policy with a face amount of $1 million, which was eventually increased to $18 million.  As an agent, Belardino received commissions from the insurance company once the client’s application was approved.

Belardino also applied for two more life insurance policies on behalf of the client without their knowledge or authorization with a face value of $3 million and $5 million respectively.  While applying for the policies, Belardino lied about the client’s net worth and health, and increased the face amount of one insurance policy to $6 million and the other to $12.1 million again without knowledge or authorization.  He also paid and attempted to pay the policy premiums of $194,280 and $105,000 respectively with the client’s funds, while at the same time receiving nearly $200,000 in commissions.

Belardino, 37, pled guilty to two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison, and one count of making a false statement to the Internal Revenue Service, which carries a maximum sentence of five years in prison.