Ottawa County man faces prison for faking stock broker's license, losing investors' money

GRAND RAPIDS — An Ottawa County man has pleaded guilty to securities fraud after he faked his stock broker's license, lied to clients and lost much of their money on the stock market, the U.S. Attorney's Office for the Western District of Michigan said.

Joshua Rupp, 37, convinced clients to invest money with him by claiming to be a licensed broker and securities trader and claiming to work for brokerage firms. Authorities said he was never a registered broker with the state of Michigan, the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority, nor did he work for a registered brokerage.

Rupp pleaded guilty Nov. 12 to securities fraud in the U.S. District Court for Western District of Michigan. A civil case filed by the U.S. Securities and Exchange Commission alleging violations of antifraud securities laws in July was put on hold while the criminal charges were pending.

At least 19 clients invested a total of $2.7 million with Rupp, who promised their money couldn't be lost. According to the SEC complaint against Rupp, he told various investors their principal was backed by insurance, guaranteed against losses by his uncle and that his investment strategy carried "virtually no risk."

Rupp, formerly a contractor, used his builder's license from the state of Michigan to fake a securities license.

According to court documents, Rupp, who never passed a broker's exam, lost more than $1.4 million of investors' money on the stock market. Meanwhile, authorities said, he lied to clients about how their investments were performing. An app provided to clients to track investment performance showed their investments growing while their accounts were losing money.

He misappropriated more than $500,000 for personal use, using the money to pay for groceries and vacations, and, "in Ponzi-like manner," also used invested funds to pay back other investors who made withdrawals, according to the SEC filing. The filing said he worked in Holland, Grand Haven and Grand Rapids.

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According to Capt. Jake Sparks of the Ottawa County Sheriff's Office, officers began taking fraud reports regarding Rupp the day after he was involved in a home invasion spree, breaking into two homes in Polkton Township while naked. His attorney said at the time that he had had a bad reaction to medication and had been under financial strain.

Sparks said some of the fraud victims had started talking to each other and others had seen the news reports of Rupp's arrest, prompting them to come forward.

"When we interviewed him during the burglary investigation, he said he was struggling because he knew he had lost a lot of money," Sparks said.

The investigation, which began with detectives from the OCSO financial crimes unit and the Grand Haven Department of Public Safety, was turned over to the Federal Bureau of Investigations.

“The defendant fabricated nearly everything about himself as a broker—his license, experience, and business connections—to induce investors to trust him with their money. He then betrayed that trust by taking a portion of the money for his personal use and fabricating false account statements,” said Timothy Waters, Special Agent in Charge of the Federal Bureau of Investigation in Michigan.

“Financial crimes are not victimless, and I’d like to thank the Ottawa County Sheriff’s Office for their assistance in providing a measure of justice to the victims impacted by Mr. Rupp’s crimes.”

Rupp is currently serving a 45-month sentence in the Central Michigan Correctional Facility in St. Louis, Mich. for the charges related to the home invasions.

Rupp is expected to be sentenced for the federal charges at 9 a.m. March 23 by U.S. District Court Judge Hala Jarbou in Lansing.

As part of his plea agreement with the U.S. Attorney's Office, Rupp agreed to pay restitution to investors of at least $2.7 million.

The U.S. Attorney's Office said it is possible other victims exist who have not yet come forward. People who believe they were defrauded by Rupp can contact the Victim and Witness Unit of the U.S. Attorney’s Office at 616-808-2034.

— Contact reporter Carolyn Muyskens at cmuyskens@hollandsentinel.com and follow her on Twitter at @cjmuyskens.

This article originally appeared on The Holland Sentinel: Man faces prison for faking trading license, losing investors' money