Former Woodbury Financial Services Stockbroker & Associate Indicted on Multi-Million Dollar Securities Fraud

ST. LOUIS, MO—The United States Attorney’s Office announced the indictment of Joshua Gould, a former stockbroker with Woodbury Financial Services, Inc. and affiliate of Spetner & Associates; and David Rubin, owner and operator of two local offices of Coral Mortgage Bankers Corporation.

Count I of the indictment alleges that between May 2007 and December 31, 2010, Gould and Rubin embezzled approximately $1,500,000 from an individual solicited by Rubin to provide funds for operating capital for Coral’s St. Louis operations. The individual was assured that the funds would be held in a secure trust account, used as collateral for Coral’s operations, and that the individual would receive regular interest payments. The indictment states that between May 2007 and December 2008, the client provided Rubin approximately $1,200,000 from his and his wife’s life savings. Rubin allegedly used some of the funds to pay his own salary and to make payment of an out-of-court settlement in a sex discrimination lawsuit. Rubin transferred the balance of the funds to Gould. Gould allegedly 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 allegedly 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. The indictment alleges that Gould and Rubin prepared and gave the individual false account statements, including statements falsely representing to the client 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.

Count II of the indictment alleges that Gould embezzled approximately $3,500,000 from numerous brokerage clients and the owners of the RARJI Trust. Gould solicited clients of the Spetner and Associates insurance agency to move their investment portfolios and retirement accounts from other brokerages to him at Capital Analysts, Inc., and then Woodbury. 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 allegedly used the 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 allegedly 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.

JOSHUA GOULD, University City, Missouri, was indicted by a federal grand jury on one felony count of wire fraud and one felony count of mail fraud. DAVID RUBIN, Chesterfield, Missouri, was indicted on one felony count of wire fraud. Additionally, upon a finding of guilt, the defendants will be subject to a forfeiture allegation, which will require them to forfeit to the government all money derived from their illegal activity.

If convicted, 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.

As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.