Financial advisor from Shaker Heights charged with embezzling $287,000 from client

A Shaker Heights man was charged in federal court with defrauding an investor out of more than $287,000, said U.S. Attorney Justin E. Herdman, FBI Special Agent in Charge Stephen D. Anthony and IRS Special Agent in Charge Ryan L. Korner.

James M. Unger, 51, was charged via criminal information with two counts of wire fraud and five counts of filing false tax returns.

Unger worked as a securities broker and investment advisor who provided financial advice to clients. Between 2006 and 2014, Unger devised a scheme to defraud an investor identified in court documents as E.C., according to court documents.

E.C. executed a durable power of attorney in 2007, which gave Unger control of her financial affairs. A few months later, Unger convinced E.C. to invest in a high-risk international casino project based on Unger’s assurances that it was a safe, lucrative investment opportunity. Unger and others provided E.C. with promissory notes guaranteeing a 15 percent annual rate of return, according to court documents.

E.C. invested approximately $407,000 in the project between 2008 and 2009. By 2012, Unger had wired money from E.C.’s bank account, without her knowledge or consent, to another client. He converted her investment to stock in a new company and convinced E.C. to invest an additional $79,985, according to court documents.

In 2014, E.C. told Unger she wanted to liquidate her investment in the casino project. She believed her investment, including earnings, totaled approximately $1.9 million, but her total investment was actually lost, according to court documents.

Unger had actually embezzled funds from E.C.’s bank accounts to enrich himself and pay for his own personal expenses, including pay his daughter’s college expenses, according to court documents.

In total, Unger embezzled approximately $287,464 from E.C. He also failed to claim some of this income on his tax returns between 2011 and 2015, according to court documents.

If convicted, the defendant’s sentence will be determined by the Court after reviewing factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

This case is being prosecuted by Assistant U.S. Attorneys Robert J. Patton and Alejandro A. Abreu following an investigation by the FBI and IRS – Criminal Investigations. 

An information is only a charge and is not evidence of guilt. The defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.