Granite City financial adviser bilked $1.5 million from investors to buy cars, jewelry
When a potential client approached Douglas Kiffmeyer for financial planning advice in 2013, he told her he had a “very good plan” that would produce extra monthly income and protect her investments should she ever move into a retirement home.
Kiffmeyer, who was a registered broker and investment adviser in southern Illinois at the time, directed the woman to cash in two IRA accounts and one annuity, falsely telling her that the payout would not be taxable. She gave him the $386,487.41 in exchange for a promissory note.
But payments stopped being credited to her investment account shortly after. In fact, Kiffmeyer made just one $15,000 payment in 2015 when the woman contacted police and the Illinois Attorney General’s Office. That payment was made using another investor’s money, federal court documents show.
Kiffmeyer, 45, was charged in federal court in 2018 after an Internal Revenue Service investigation showed he had schemed investors into giving him at least $1.5 million over the course of five years, which he used to buy multiple cars and an engagement ring. None of the money he received was reported to the IRS as income to the corporation or as personal income.
Last week, Kiffmeyer pleaded guilty in U.S. District Court for the Southern District of Illinois to a 17-count indictment of wire fraud, failure to file individual and corporate income tax returns and money laundering.
In a statement through his lawyer, Peter Cohen, Kiffmeyer said that he regrets what happened and that he hopes pleading guilty and accepting responsibility will allow him and his victims to put the case in the past.
“He’s sorry for what he did and wants to make things right as best as he can,” Cohen said.
Investment schemes
According to the complaint against him, Kiffmeyer ran two businesses, Modern Retirement Professionals and Kiffmeyer Tax Advisory Group, Inc., until both were dissolved by the State of Illinois in 2014. He also operated a business called Creative Digital Inc., in Edwardsville, which was a corporation that designed and produced a digital trigger for the M-16 rifle.
In 2011, Kiffmeyer sold stock in Creative Digital Inc. to one investor for $100,000 and to a pair of investors for $30,000, the complaint states. The next year, he came back to the first investor and asked for an additional $667,000 that he said were needed for “additional expenses to develop the trigger.”
All of those funds were deposited into a personal bank account, the complaint states. During the course of 2012, Kiffmeyer used that money to buy a GMC Sierra 1500 truck, a Hummer H2, a motor coach, a Chevrolet Corvette, a Nissan 370 and an engagement ring.
According to the complaint, in 2013, Kiffmeyer approached the pair of investors and convinced them to invest $30,000 more into the development of the digital trigger. The complaint states that Kiffmeyer assured the two that within six months of their investment date, they would receive a return of double their investment, before he turned around and used $28,500 of that money for personal expenses and paid them back $1,500, the only money the pair received back from their investment.
In 2013, Kiffmeyer also approached a man who was nearing age 90 and told him he had a good investment for him, one that would guarantee him $3,000 a month for the rest of his life and the rest to his children when he died. The elderly man obliged, and signed Kiffmeyer two checks totaling $107,389.40 in exchange for a promissory note.
Two years later, the complaint states, Kiffmeyer approached a pair of investors to invest in a medical marijuana clinic, telling them they would receive a 20% return on investment broken down into monthly payments. Hearing this, the pair gave him $206,814.44 for startup of the clinic.
Kiffmeyer then deposited $126,914 of that money into his personal bank account, purchased a cashier’s check for $70,000 and withdrew $9,900 in cash, according to the complaint. Some of the investment was used to cover benefits to another client after he was pressed by authorities.
“Very little of the investor funds was ever used for the intended purpose and most of the funds were used by Kiffmeyer to pay for personal expenses,” the complaint states. “None of the money was reported by Kiffmeyer as income to the corporation or as personal income to the Internal Revenue Service.”
The aftermath
According to the Financial Industry Regulation Authority, Kiffmeyer has not been registered as a broker since 2014. The agency expelled his firm in Maryville in January of that year.
Between the time he was charged in June 2018 and his guilty plea in July 2020, Kiffmeyer’s case went through several speed bumps, including multiple lawyer changes, a mental competency hearing that resulted in a hospitalization period and several motions for a speedy trial.
Kiffmeyer is scheduled to be sentenced in federal court on Nov. 10. According to Cohen, his lawyer, Kiffmeyer is “not in good health” after a failed back surgery and that the legal process has been tough on him physically.
Verifying a financial professional
According to the IRS, anyone can be a paid tax return preparer as long as they have an IRS Preparer Tax Identification Number, or PTIN. However, tax return preparers have differing levels of skills, education and expertise so it’s advised to get information from the Volunteer Income Tax Assistance program.
The IRS also has a Directory of Federal Tax Return Preparers database to find a preparer in your area who is certified.
In addition to BrokerSearch, where you can see if your potential planner is registered with the Financial Industry Regulation Authority, the Certified Financial Planners Board of Ethics also has a search tool in which you can verify if your potential planner has been certified with the organization.
This story was originally published August 7, 2020 at 7:00 AM.
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