ALTOONA — A disbarred financial adviser who ran a wealth management firm in Altoona has agreed to plead guilty to two criminal fraud charges brought against him by the federal government.
Michael F. Shillin, 32, signed an agreement in late April to plead guilty to one count each of wire fraud and bank fraud, and the U.S. Attorney’s Office will dismiss nine other wire fraud charges contained in the same indictment.
Shillin’s next scheduled appearance is to formally enter his plea in U.S. District Court for the Western District of Wisconsin on May 23 at a courtroom in Madison.
The wire fraud charge carries a maximum penalty of 20 years in prison, three years of extended release and a $250,000 fine. The maximum penalty for bank fraud is 30 years in prison, five years of supervised release and a $1 million fine.
Shillin also will be required to pay restitution to his victims. That means he must pay back $462,000 in loans to Northwestern Bank of Chippewa Falls, but the amount he’ll have to return to his clients has not yet been determined.
Shillin was indicted in late October on the federal charges, but then allowed to be on release while his case was pending. Judge Stephen L. Crocker revoked Shillin’s release on April 14 after the defendant had been caught taking an unauthorized tropical vacation with his girlfriend to the U.S. Virgin Islands in early April.
The plea agreement explains how the government’s case relied on former clients and their documentation to establish that Shillin had lied to them about their investments.
“Shillin kept his clients artificially happy so they would refer other clients, keep money invested for longer, and invest more money,” stated the agreement written by Assistant U.S. Attorney Zachary Corey. Shillin’s firm charged its clients a yearly fee equal to a percentage of the money it managed for them.
One instance cited in the government’s case is a married couple that Shillin managed money for. He told them he’d bought shares of SpaceX for them and they were making a large profit. However, Shillin never did buy those shares, and SpaceX continues to be a private company that does not sell stocks to the general public. The plea agreement cited text messages and emails from fall 2019 and spring 2020 between the couple and Shillin to corroborate the allegations.
Shillin also is accused of defrauding clients by misrepresenting the costs and benefits of insurance policies he convinced them to buy. For example, Shillin advised a couple to switch their State Farm life insurance policies to ones at John Hancock with better long-term care benefits. However, when one of those clients called John Hancock in October 2020 about the policy, the company said the policy number provided by Shillin was invalid. The client then discovered the money provided to Shillin to buy the life insurance policy was still sitting in an investment account at Shillin Wealth Management.
Shillin also made fraudulent tax documents that led clients to believe they were eligible for tax breaks they were not entitled to, the plea agreement stated. Based on 1099 forms from Shillin, a couple expected to only pay $1,628 in federal taxes. But when learning they didn’t qualify for tax breaks Shillin promised, the couple re-filed and found they owed $27,512 in federal taxes.
Between August 2020 and September 2020, Shillin took out a total of $462,000 in loans from Northwestern Bank with the explanation it was to cover his firm’s payroll. To show he had collateral for the loans, Shillin provided a statement showing $1.25 million in an account owned by Shillin Wealth Management. However, that statement was actually for an account belonging to a couple advised by Shillin, not the financial firm itself, according to the plea agreement.
In addition to the federal criminal charges against him, Shillin also filed for Chapter 7 bankruptcy in November. The bank and multiple former clients are among the creditors listed in Shillin’s bankruptcy petition. That case is still pending in the U.S. Bankruptcy Court for the Eastern District of Wisconsin.
According to a Financial Industry Regulatory Agency database, Shillin began his career as a broker in July 2011 at Edward Jones in Chippewa Falls before changing firms to Raymond James Financial Services in August 2014. That second firm fired Shillin in mid-2018 for failing to follow the company’s procedures involving client fees, so then he opened his own firm. Shillin Wealth Management was in business in Altoona’s River Prairie development from mid-2018 until it closed at the end of 2020 while he was under investigation.
Shillin Wealth Management managed 2,992 accounts with nearly $135.5 million in assets in them before the firm went defunct in December 2020, according to a financial report provided to the court.
In January, the
U.S. Securities and Exchange Commission barred Shillin from being a
financial adviser, following similar bans imposed by Wisconsin
regulators and FINRA.
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