Lawrence Allen DeShetler, an investment adviser and former certified financial planner in The Woodlands, pleaded guilty to mail fraud June 8 in U.S. District Court in Beaumont, Acting U.S. Attorney Brit Featherston announced.
DeShetler fraudulently obtained $1.9 million from five clients of his advisory business, DeShetler & Company Inc.
DeShetler faces a maximum sentence of 20 years at sentencing. The date has not been set.
In connection with the plea agreement, DeShetler will not contest that a State of Texas administrative law case that the Texas State Securities Board filed to revoke his registration as an investment adviser.
According to the Information filed in federal court, DeShetler advised clients on investment strategies and financial planning. In 2014, he started urging clients to withdraw money from their investments and give him the proceeds so he could earn higher returns than they were getting.
Instead of investing their money, DeShetler placed the funds into a bank account over which he had sole authority.
In a Factual Basis and Stipulation filed in U.S. District Court on June 8, DeShetler admitted using money from one investor to start construction on a house in Nicaragua, which has no extradition treaty with the United States.
DeShetler also convinced an 83-year-old client in Pearland to liquidate an existing trust account and transfer $187,699 to him so he could earn better returns. The client's husband died in late 2015, and in May 2016 the woman allowed DeShetler to stay at her home while she visited her son. When she returned six weeks later, all of her investment documents were missing and DeShetler had left, according to the stipulation.
In a proceeding at the State Office of Administrative Hearings, the Inspections & Compliance Division of the Texas State Securities Board filed a Notice of Hearing in August 2016 to revoke DeShetler’s registration.
State Securities Board staff alleged that DeShetler misapplied funds from a client’s individual retirement account that was once worth $726,785. Staff alleged that in January 2016, DeShetler advised a client to cash out her IRA and transfer the funds to him.
DeShetler said he would invest the money in a new IRA, but deposited the funds into the bank account cited in the Information.
DeShetler spent some of the client’s money on restaurant bills, country club fees, clothing, and pool cleaning services.
The case was pending when DeShetler was arrested in August 2016 and subsequently indicted on state theft charges in November 2016 in Montgomery County, Texas. He remained in Montgomery County jail until shortly before his guilty plea in federal court.
The criminal case was investigated by the FBI, the Texas State Securities Board, the district attorneys in Montgomery and Jefferson counties, the sheriffs’ offices in Orange County and Montgomery County, and the Texas Department of Public Safety.