United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON MOTION FOR SUMMARY
Dennis Saylor IV United States District Judge.
a civil enforcement action brought by the Securities and
Exchange Commission against Richard G. Cody and a limited
liability company through which he did business, Boston
Investment Partners, LLC. The complaint alleges that Cody, an
investment adviser, lied to several clients about their
retirement accounts and then undertook a variety of deceptive
and fraudulent acts to hide his misconduct. It further
alleges that Cody violated § 10(b) of the Securities
Exchange Act of 1934, 15 U.S.C. § 78j(b); Rule 10b-5, 17
C.F.R. § 340.10b-5; and §§ 206(1)-(2) of the
Investment Advisers Act of 1940, 15 U.S.C. §§
has moved for summary judgment in its favor. For the
following reasons, the motion will be granted.
G. Cody was an investment adviser and/or broker
representative at all times relevant to the following events.
(Indict. ¶ 1-2). Boston Investment Partners, LLC was a
limited liability company through which Cody conducted some
of his business. (Id. ¶ 3).
1998 through September 2016, Cody worked as an investment
adviser at a variety of different firms. (Rule 11 Hearing,
17-cr-10291 Dkt. #102, 13:19-14:1). In that capacity, he
managed the retirement accounts for numerous individuals,
which included investing, reporting, and disbursing client
funds. (Id. 14:2-11).
and Paul M., Kenneth E., and Carol and Ray B. were clients of
Cody from May 2005 to September 2016. (Id. 14:2-8).
Each of those sets of clients involved at least one person
who, after a long career at Verizon, retired, and elected to
receive their pensions as lump sums. (Id.). Those
funds were then entrusted to Cody for investment.
dealings with each of those clients, Cody “willfully
engaged in transactions, practices, and courses of business
that were fraudulent, deceptive, and manipulative.”
(Id. 14:12-18). In essence, he falsely assured the
victims that any account balances remained high and that
their distributions came from interest income. (Id.
14:16-18). In fact, the accounts suffered significant losses,
especially in 2008, and the value of the accounts was
steadily declining. (Id. at 14:15-21).
hid that fact from his victims. On one occasion, for example,
Kenneth E. called Cody after reviewing a brokerage-firm
statement indicating that his account had declined in value.
(Id. 14:22-25). Rather than tell the truth, Cody
falsely told him that he had additional funds invested
elsewhere in bonds, and that the statement did not reflect
the full value of his accounts. (Id.).
also created false documents to conceal his deception from
his victims. In April 2016, Maureen M. told him that she
needed to borrow $10, 000 from her retirement account.
(Id. 15:2-5). At that point, her accounts were
basically empty. (Id.). Cody nonetheless told her
that her money was in an annuity with Sun Life and proceeded
to create a falsified Sun Life annuity form with various
false details handwritten on the form. (Id.
15:5-10). That same year, he sent both Maureen M. and Kenneth
E. falsified IRS Form 1099, reflecting about $30, 000 in
distributions. (Id. 15:11-18). Both individuals,
however, had retirement accounts that were empty, or nearly
so, during this time. (Id. 15:11-22).
January 2013, Cody was suspended from associating with any
FINRA member firm a one-year period. (Id. 15:23-25).
He also concealed that fact from his victims. He covertly
transferred his accounts to his wife, Jill Cody, by
submitting documents with forged signatures. (Id.
15:25-16:2). His victims were never told of the suspension.
in 2014, the retirement savings of Maureen M. and Kenneth E.
were fully depleted. Cody nonetheless paid the monthly
payments that they expected to receive from his own accounts.
Because of that, neither victim was alerted as to the
depleted status of their account. (Id. 16:3-8).
the deception was discovered. Cody was indicted for, and
eventually pleaded guilty to, securities fraud.
filed this action on December 12, 2016. On October 2, 2017,
the United States filed a motion to intervene and to stay
discovery pending completion of the criminal case. The Court