Wednesday, July 27, 2016
BOSTON – A Woburn investment advisor was sentenced today in U.S. District Court in Boston in connection with defrauding investors of over $1.3 million.
Rosalind Herman, 61, was sentenced to seven years in prison, three years of supervised release, and ordered to pay restitution of $1,819,391. In April 2016, she was convicted by a federal jury of investment adviser fraud, tax fraud, wire fraud and conspiracy charges.
Herman owned and controlled companies in Massachusetts and Nevada that provided investment advice and sold insurance products to individual investors. From 2008 to March 2013, Herman and her business partner, Gregg Caplitz, pitched a new hedge fund company investment to existing clients. The purported investment was billed by Caplitz and Herman as a hedge fund company owned by Herman. No hedge fund ever existed, however, and the more than $1.3 million in investment funds obtained from clients were used to pay personal expenses for Herman, her family and Caplitz.
In addition, from 2003 to 2012, Herman failed to file accurate tax returns for herself and her companies, including the $1.3 million in investor funds she took from investors, and also by fabricating business expenses. In many instances during this time period, Herman failed to file any tax returns for herself or her companies.
In May 2016, Caplitz was sentenced to 42 months in prison after pleading guilty to fraud and tax charges, and testifying against Herman at trial.
United States Attorney Carmen M. Ortiz; Joel P. Garland, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement. The U.S. Attorney’s Office acknowledges the assistance provided by the Securities and Exchange Commission. The case was prosecuted by Assistant U.S. Attorneys Sara Miron Bloom of Ortiz’s Economic Crimes Unit, and Mary B. Murrane, Chief of Ortiz’s Civil Division.