A former Lakewood stockbroker who federal prosecutors called “arrogant and shameless” was sentenced Thursday in U.S. District Court in Tacoma to five years in prison for bilking an elderly client out of hundreds of thousands of dollars.
Michael D. Montgomery, 44, also must pay yet-to-be-determined restitution to the estate of the man he defrauded. That man died in 2006 at age 90.
Prosecutors said Montgomery, who now calls Colorado home, served as the man’s financial adviser and then became trustee of the man’s revocable living trust. He used his positions to make loans to himself from the man’s accounts, many of which he failed to repay.
They also said he billed the estate for hours he never worked.
Prosecutors said Montgomery purloined $1.2 million from the man and his estate. His defense attorney, Emily Gause of Seattle, claims the loss was less than $900,000.
He pleaded guilty in June to wire fraud and filing a false tax return for failing to report the income.
Prosecutors said Montgomery used the stolen money to finance a high-flying lifestyle in Aspen, Colo., where he trained to be an elite triathlete. The victim’s heirs were left with nearly nothing.
“In the years since he was caught and exposed, he has paid nothing in restitution and offered nothing to the victims,” prosecutors wrote in a sentencing memorandum. “Montgomery is nonchalant about his fraud, displaying slick indifference for what he has done.”
Gause argued her client deserved a sentence of three years in prison.
She wrote in her own sentencing memo that Montgomery, who was born in Renton and lived most of his life in Pierce County, “is a gentle man who has given countless hours to volunteer work and helping others.”
He began working as a broker in 1991 and soon was consumed by the greed culture associated with that work, Gause said.
“Michael learned that the only question his colleagues cared about was how much money Michael had,” she wrote.
The charges against him cost him his job and his marriage, Gause added.
“Now, Mr. Montgomery will spend the rest of his life paying back significant restitution to (the victim’s) family,” she said.
U.S. District Court Judge Robert Bryan rejected Gause’s calls for leniency, saying Montgomery’s actions amounted to “a course of criminal conduct that made this the most serious of frauds.”
“The public still needs some protection from Mr. Montgomery,” Bryan said.
The Internal Revenue Service and state Department of Financial Institutions investigated the case.
“When you entrust your hard-earned money to a ‘money manager,’ you understand there are risks in the investment markets, but you don’t expect your adviser will use your money as their personal slush fund,” said Kenneth Hines, special agent in charge of the IRS criminal investigation office in Seattle.
“This sentencing should serve as a warning to professionals managing others’ money that taking advantage of elderly clients carries severe consequences.”