Kirkland Stock Broker Sentenced to More Than Four Years in Prison for Wire Fraud

Defendant Sent Phony Statements to Clients Hiding Significant Losses and Commissions

RICHARD A. Finger Jr., 32, of Bellevue, Washington, was sentenced today in U.S. District Court in Seattle to 54 months in prison, three years of supervised release, and a restitution figure expected to exceed $7 million for wire fraud. Finger owned and operated Black Diamond Capital Management LLC and Black Diamond Securities LLC of Kirkland, Washington. Finger defrauded 10 clients of as much as $7 million. At sentencing U.S. District Judge Ricardo S. Martinez asked him, “You had to know the potential impact this would have on all the people who trusted you with their savings. What did you see when you looked in the mirror?”

Some of the victims invested with Finger when he was working for a Seattle brokerage firm. One victim investor placed nearly $700,000 with Finger for investments. From the fall of 2009 through 2010, Finger assured the client the investments were growing steadily, when in fact the account was sustaining significant losses. When Finger moved from the Seattle brokerage to his own firm, he provided the client with phony statements showing his account was worth more than $1.2 million—in fact, at that time, the account was worth less than $5,500. In addition to the trading losses, Finger admits taking significant commissions from 10 accounts and using them for his own benefit.

The plea agreement, filed in November 2011, further details how a second client invested $1 million with Finger in early June 2011, and by the end of the month the account had lost $160,000 due to trades and was charged an additional $400,000 in commissions. By mid-July 2011, the account was worth less than $225,000. This second client and nine others were provided statements by e-mail. The e-mailed statements were false but were made to appear legitimate by following the format of the clearing firm Finger used to place the trades. Finger transferred hundreds of thousands of dollars from the brokerage accounts to his own personal checking account as large commissions to pay for his own credit card bills, food, and entertainment as well as business expenses such as payroll, fees, and taxes.

While he was providing false statements to his clients, Finger was leading a lavish lifestyle—leasing a $71,000 Escalade and a $13,000 Ducati motorcycle. “Month after month, defendant Finger led investors to believe that he was generating positive returns on their millions of dollars when, in fact, he was causing significant losses and siphoning of hundreds of thousands of dollars in undisclosed, excessive commissions. Defendant Finger’s fraud allowed him to live a very lavish lifestyle at the expense of his investors,” prosecutors wrote in their sentencing memo.

This case was brought in coordination with the President’s Financial Fraud Enforcement Task Force, which was established to wage an aggressive and coordinated effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

To report financial fraud crimes and learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.

The case was investigated by the Kirkland Police Department and the FBI and is being prosecuted by Assistant United States Attorney Justin Arnold. The Securities and Exchange Commission (SEC) is also pursuing civil penalties.

For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110 or Emily.Langlie@USDOJ.Gov.