Kirkland, Washington Stock Broker Pleads Guilty to Wire Fraud
Defendant Sent Phony Statements to Clients Hiding Significant Losses and Commissions

RICHARD A. FINGER Jr., 32, a resident of Bellevue, Washington, pleaded guilty yesterday to wire fraud. FINGER owned and operated Black Diamond Capital Management, LLC and Black Diamond Securities, LLC of Kirkland, Washington. FINGER was charged September 8, 2011. In the plea agreement FINGER admits he defrauded at least ten clients of as much as $7 million. The amount of restitution will be determined at sentencing. Prosecutors have agreed to recommend a sentence of 78 months in prison when FINGER is sentenced by U.S. District Judge Ricardo S. Martinez on February 17, 2012.

In the plea agreement, FINGER admits that 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 ten accounts and using them for his own benefit.

The plea agreement 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 at least 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.

The case is being 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.