Defrocked NM Broker Rolls the Dice to Stay out of Jail
A New Mexico judge has approved an unusual plea deal in a securities fraud case allowing a former Albuquerque stock broker accused of fleecing clients in order to pay gambling debts to stay out of jail by rolling the dice – literally.
The Albuquerque Journal reported that District Judge Ross C. Sanchez agreed to hold off jailing Samuel McMaster Jr. to allow him to travel around the country, mostly for poker tournaments. The reason: to raise funds to pay $444,486.31 to 23 individuals or couples named as victims in the plea pact. The Journal said McMaster has been playing poker to make ends meet since he can no longer work in the securities industry.
Under the terms of the deal, McMaster, who listed his occupation on court papers as “professional gambler,” is supposed to start making his monthly $7,500 restitution payments November 1. If he skips two payments, the case reverts back to the court docket and he will have to appear for sentencing in Sanchez’s courtroom where he will face up to 12 years in jail.
According to the newspaper, McMaster pleaded guilty to 26 felony charges of securities fraud, sale of an unregistered security, sale of a security by an unlicensed broker-dealer, fraud over $20,000, and fraud over $2,500 as part of the plea deal.
“We do have the unusual case here where we are agreeing to delay sentencing for a period of time to allow Mr. McMaster to set a track record as to whether or not he can pay back $400,000 in restitution,” prosecutor Phyllis H. Bowman told the Journal.
McMaster was originally charged in April 2009 with 177 counts of securities and fraud-related charges by the securities division of the state Regulation and Licensing Department and the Bernalillo County District Attorney’s Office, but some of the allegations were dropped as part of the plea. He faced 549 years in prison if convicted on all the original counts.
Details of the Allegations
Bowman told the newspaper that most of McMaster’s victims were lured in by a "very well-liked, reputable insurance agent" who offered high returns on CDs and promissory notes through his company.
A state Regulation and Licensing Department news release about the indictment included this description of the allegations:
The indictment relates to the alleged activities of McMaster’s Albuquerque-based firm, Santa Fe Financial Group, Inc. from December 2000 to November 2005. McMaster sold insurance products and securities through his company, but eventually was barred from working in the securities industry for failure to respond to regulatory requests for information. In May 2005 he also lost his last insurance appointment.
However, McMaster continued to operate and allegedly solicited his clients to invest in unregistered securities described as “notes” or “CDs” issued by his company. The “notes” were due in six to twenty-four months with interest rates ranging from six to 10%. McMaster failed to disclose information that could have influenced an investor’s decisions and also is alleged to have misrepresented how the money was to be used.
Investors who requested their funds back were told that the notes had been “rolled over,” but never received payment. Many investors could not reach him by phone and he allegedly told others he was having trouble with the Internal Revenue Service.
The McMaster indictment is at http://www.rld.state.nm.us/PublicInfo/2009/McMaster%20Indictment.pdf.