Commissioner Travis J. Iles revoked the registration of George A.
“Gus” Marwieh, who fraudulently
sold more than $5 million in pension-linked investments and real estate
development notes to clients without disclosing his excessive commissions,
misuse of client funds, and conflicts of interest.
the president of Marwieh Advisory Services LLC in
Austin, consented to the Oct. 11 Disciplinary
Order. The order revoked
the investment adviser registration of Marwieh Advisory
Services and the investment adviser representative registration of Marwieh.
The revocation order
stemmed from a May 7 inspection of Marwieh by
staff of the State Securities Board’s Inspections and Compliance Division.
Read the State
Securities Board Investor Alert: The Perils of Pension
revealed that from mid-2013 through 2017, Marwieh almost
exclusively recommended and sold two securities: investments from Future Income
Payments LLC (FIP), which were supposedly based on the payout from pensions,
and promissory notes issued by real estate developers that Marwieh said
would pay 18% annually.
The investments paid
off – for Marwieh.
He reaped $343,431 in commissions from selling the pension income investments
and the real estate notes.
$228,109 in commissions from selling $2.2 million in the real estate notes and
$115,322 from selling pension income investments totaling $1.8 million.
charged his clients an annual management fee of 1% to 2% of the value of their
assets – even though the pension-linked and real estate investments required no
his fiduciary duty to clients by not disclosing the conflicts of interest that
gave him a financial incentive to recommend the investments.
In the Form ADV Part
2, which an investment adviser must provide to clients as the primary
disclosure document, Marwieh stated
that neither he nor his firm receives any external compensation for the sale of
securities to clients.
In fact, his advisory
business was based almost entirely on investments he sold while concealing the
costs and conflicts of interest.
misused funds intended to purchase interests in the real estate notes.
Marwieh opened what he said was an escrow account to hold
investor funds, but he operated it like his personal account. Marwieh controlled
the account, it was never audited, and investors never received monthly
statements about the real estate notes.
In a one-week period
in 2017, Marwieh took
in $189,881 from three clients who intended to invest in the development
notes. Marwieh never
transferred the money to the developers.
Instead, Marwieh used
the money to pay $194,918 to a different investor whose development note had
Investor funds in the
escrow account also paid for Marwieh’s personal
expenses, including credit card payments, rent, automobile loans, and