Financial Advisor Indicted on Fraud Charges for Allegedly Swindling Investors out of $4.7 Million

CHICAGO — A financial advisor who told clients they were guaranteed to make money by investing with him has been indicted for allegedly defrauding those clients out of $4.7 million.

DARAYL DAVIS falsely represented to clients that they were guaranteed to receive annual interest payments of at least 6% if they invested with Davis’s two firms, Washington, D.C.-based Financial Assurance Corp. and Los Angeles, Calif.-based Affluent Advisory Group LLC, according to a superseding indictment returned Tuesday in U.S. District Court in Chicago.  Davis also claimed that his clients’ principal investments were protected against losses and that some of the purported investments were backed by a well-known multinational life insurance company, the superseding indictment states.  The charges describe how Davis defrauded some of his 22 victims by causing them to “roll over” their retirement savings into an account controlled by Davis.  In reality, Davis did not invest the funds as promised, and none of the purported investments offered by Davis through FAC and AAG had any affiliation with the life insurance company, the charges allege.

Instead of investing his clients’ money, Davis spent the money for his own personal benefit, including $706,000 on credit card payments, $476,500 to rent a mansion in Los Angeles, $102,000 on airline tickets, $45,000 on car rentals, $42,500 on membership in an exclusive club, $42,000 on luxury hotels, and $25,000 on theater tickets, the indictment states.  Davis also used the investors’ funds to make Ponzi-type payments to newer investors to conceal the scam, the charges allege.  The alleged fraud scheme began in 2003 and continued until this year.

The indictment charges Davis, 45, of Bowie, Md., with six counts of money laundering, five counts of wire fraud, four counts of mail fraud, and one count of aggravated identity theft.  Arraignment is scheduled for June 28, 2018, at 9:30 a.m., before U.S. District Judge Robert W. Gettleman.

The superseding indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.  Valuable assistance was provided by the U.S. Securities and Exchange Commission, which previously filed a civil complaint against Davis.

The public is reminded that an indictment is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.  Each count of wire fraud, mail fraud and money laundering is punishable by up to 20 years in prison, while aggravated identity theft carries a mandatory consecutive prison term of two years.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

The government is represented by Assistant U.S. Attorney Jennie H. Levin.