A former investment manager with a long history of litigation was arrested last week in New York for allegedly defrauding a North Carolina insurance company out of more than $34 million.
Bradley Reifler, the founder and chief executive officer of Forefront Capital Holdings, was arrested on December 3 and charged with four counts of wire fraud and one count of perjury, according to the U.S. Department of Justice. The arrest follows a web of legal cases, a Securities and Exchange Commission charge, bankruptcy, and a FINRA bar. Reifler’s attorney did not return an email seeking comment.
According to an unsealed indictment in North Carolina, Reifler served as an investment advisor to more than $34 million in assets belonging to a a North Carolina-based life insurance company.
Although the indictment doesn’t name the company, a separate court case between Reifler and the North Carolina Mutual Life Insurance Company, the oldest and largest African American life insurance company in the United States, is winding its way through court. The allegations in both cases are similar.
The trust assets mentioned in the indictment were required to be allocated to “eligible investments” that met certain state criteria. However, Reifler allegedly “misappropriated” the money, using it to repay other investors, to pay overhead expenses at Forefront, and to invest in “high-risk, 'junk,' or self-dealing investments that violated the investment requirements,” according to the indictment.
In 2016, North Carolina’s Department of Insurance performed an audit on the life insurance company, according to the indictment. Reifler allegedly provided fabricated documentation to the auditors, according to the court filing.
Soon after the audit, the life insurance company sought to liquidate its trust investments and contacted Reifler about some past-due loans. According to the indictment Reifler allegedly first attempted to divert blame onto another company, then claimed that he did not serve as an investment advisor to the trust.
He then filed a complaint with the Federal Bureau of Investigation’s internet crime complaint center, officially blaming the wrongful investments on a company that he said his firm invested with. At the same time, Reifler allegedly told an IT employee at his company to ensure that all deleted files are “permanently deleted,” the indictment alleged.
In January 2017, Reifler filed for bankruptcy, according to the indictment. In December of that year, as a part of the bankruptcy proceedings, Reifler was required to provide access to his electronic devices to third parties.
He allegedly tried to destroy evidence by searching for information on how to delete emails and text messages, deleting electronic folders related to the life insurance company and investment advisory agreement, and then texting the IT employee to delete all emails from 2016 on back, the indictment said.
According to the docket, bail was set at $100,000. Reifler will have to surrender travel documents, submit to a mental health evaluation, and cannot manage funds belonging to others, the docket said.
In March, the SEC charged Reifler with fraud for the same incident.
Reifler previously worked for now-defunct commodities and futures broker Refco Securities, his FINRA profile shows. Reifler also co-founded boutique investment firm Pali Capital. He departed the firm amid legal disputes with his co-founder, according to a Reuters news report from the time. The firm wound down two years later, in 2010, according to a Reuters report.
