Pro Athlete Financial Adviser Defrauded Clients of Millions

Douglas Eugene Elstun, 52, was a broker and financial adviser at the now-defunct Crossroads Financial Management, Inc., and former wealth strategist with Frontier Wealth Management, a national investment firm based in Kansas City, Missouri.

Elstun has been majority owner and Chief Commercial Officer at Crossroads Financial Management before it closed in 2019. He went on to work for Frontier Wealth Management after his company closed in 2019 but soon left in 2021 when the Securities and Exchange Commission filed a complaint against him for committing white-collar crimes during his time at Crossroads Financial Management.

On March 29, 2021, the Securities and Exchange Commission filed a complaint against Elstun for allegedly defrauding some clients and making unauthorized investment decisions that caused his clients to lose several millions of dollars.  

According to the SEC complaint, between 2015 and 2018, Elstun had fraudulently charged his clients higher the contractual advisory fees to the tune of $360,000. He has also charged advisory fees for his clients’ non-security assets, including bank account balances, real estate, and personal property. When he was not overcharging, Elstun habitually charged fictitious fees outside the contracts he had with clients.  

Furthermore, he allegedly made unsuitable and risky investments in securities, such as inverse ETFs. These investments were outside his client’s clearly stated investment objects and risk threshold. Despite a trading strategy that posed a significant threat of capital loss, Elstun routinely justified his decisions by misrepresenting the securities as insurance or portfolio hedge.

These gross misconduct, misrepresentation, and failure of fiduciary responsibilities cost Elstun’s clients millions of dollars. According to court records, the SEC alleged that Elstun violated the antifraud provisions of Section 206 of the Investment Advisers Act.

Although the complaint kept the identity of the clients anonymous, Elstun once claimed he represented at least a dozen professional athletes in a 2016 interview with The Star. Among them are high-profile basketball players like Will Shields, former guard for the Kansas City Chiefs, Paul George of the Los Angeles Clippers, and former running back for the Philadelphia Eagles, Darren Sproles.  

During the interview, Elstun had pitched himself as a financial guru who makes investment decisions that help his clients rest assured that their money is safe while they focus on their careers.

Elstun’s background had given him an edge with his clients. He was reportedly a college basketball player with the University of North Carolina and the Kansas Jayhawks before becoming a financial adviser. The SEC has suspended his license as a broker and financial adviser pending court adjudication of the case, per a FINRA report.

In his client’s defense, John Picerno, a white-collar attorney representing Elstun, said Elstun had been a victim of his circumstances. Picerno said Elstun had tried to please his clients to the point of overestimating his capabilities.

“This is a situation where he [Elstun] caught himself trying to please too many people and support his clients,” said Picerno.

The attorney said his client’s attempt to be a Jack of all Trades had caused him to err on the side of financial regulations. Pulled in too many directions, Elstun got caught up in a bad situation, but he is working towards restitution. Picerno reportedly said his Elstun has offered to cover the loss suffered by some former clients out-of-pocket. He also intends to make good to everyone in the future.

Elstun faces civil penalties and permanent revocation of his license if convicted. The conviction will essentially truncate his 27-year career as a broker and financial adviser.

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