A federal judge indicated Wednesday she is leaning toward imposing a three-year prison term on a Los Angeles-based investment adviser who siphoned $1.2 million from the accounts of a well-known professional athlete and his wife.
Jeremy Joseph Drake, 41, pleaded guilty last year to a federal wire fraud charge. Prosecutors said he deceived the athlete and his wife — identified only as “Mr. and Mrs. S” in documents filed in Los Angeles federal court — about the investment management fees they were paying and attempted to conceal the fraud by creating and sending false documents and masquerading as another person to corroborate his lies.
Drake’s attorney is arguing for a probationary sentence with some community service, while the government is asking U.S. District Judge Christina A. Snyder to impose a prison term and a restitution order of $1.2 million, according to court documents.
Snyder indicated Wednesday that she was leaning toward imposing a three-year prison term but postponed the hearing until March 22 to give attorneys time to agree on restitution and other issues.
Drake, formerly with Los Angeles-based HCR Wealth Advisors, over-billed the victims for more than three years by telling the couple that they were paying a special “VIP” management rate of 15-to-20 basis points on their $35 million in assets when he was charging over 1 percent.
In June 2016, as the wife demanded an explanation about the fees, Drake created the persona of “Ron Stenson,” who purportedly corroborated Drake’s story. Upon discovery, Drake admitted to the woman that he had been lying and warned her that reporting his misconduct could result in bad publicity for her husband, court papers show.
The U.S. Securities and Exchange Commission sued Drake in August 2017, accusing him of violating the anti-fraud provisions of the Investment Advisers Act of 1940. According to the complaint, the couple entrusted over $35 million of their assets to Drake to manage.
Last year, Drake agreed to a consent judgment with the SEC, admitting that he defrauded the victims out of $1.2 million.