SEC v. Joseph Michael Todd; Todd Financial Services, LLC; and TFS Insurance Services LLC, No. 5:23-cv-00431, Middle District of Florida (July 13, 2023) — Complaint

UNITED STATES DISTRICT COURT FOR THE
MIDDLE DISTRICT OF FLORIDA
OCALA DIVISION

UNITED STATES SECURITIES
AND EXCHANGE COMMISSION,
          Case No. 5:23-cv-00431
                                 Plaintiff,

   v.

JOSEPH MICHAEL TODD,
TODD FINANCIAL SERVICES, LLC, and
TFS INSURANCE SERVICES LLC,

   Defendants.
_____________________________________/

COMPLAINT
 Plaintiff, the United States Securities and Exchange Commission (“SEC”),
alleges as follows:
SUMMARY OF ACTION
1. From at least August 2016 through at least November 2022,
Defendant Joseph Michael Todd (“Todd”) engaged in a fraudulent scheme and
misappropriated at least $3 million from at least 20 customers of “Broker A,” a
dually registered broker-dealer and investment adviser that employed Todd as
a registered representative.  Todd obtained investor funds through deceptive
means by instructing his Broker A customers to write checks payable to his

entities Todd Financial Services, LLC (“TFS”) and/or TFS Insurance Services LLC
(“TFS Insurance”) or to Todd by falsely assuring customers that he and his
entities would invest their funds in various securities.  Instead, Todd
commingled investors’ funds and kept the money for his own personal use,
spending it on lavish real estate, boating, hunting, casinos, and adult
entertainment.  Todd perpetuated the fraud by making material
misrepresentations to customers regarding the use of their funds in meetings
that took place in person, in phone conversations, and in documents that he
prepared and provided to customers.
2. Because of their conduct, Todd, TFS, and TFS Insurance knowingly
or recklessly committed securities fraud.
3. Todd and TFS violated Section 17(a) of the Securities Act of 1933 (the
“Securities Act”) [15 U.S.C. §§ 77e(a), 77e(c), and 77q(a)] and Todd, TFS, and TFS
Insurance violated Section 10(b) of the Securities Exchange Act of 1934 (the
“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §
240.10b-5].
4. The SEC brings this lawsuit to prevent further harm to investors and
to seek disgorgement, civil penalties, permanent injunctions, and conduct-based
injunctions stemming from the Defendants’ wrongdoing, and a permanent
officer-and-director bar against Todd.

5.
Unless the Defendants are permanently restrained and enjoined,
they will continue to engage in the acts, practices, and courses of business set
forth in this Complaint and in acts, practices, and courses of business of similar
type and object.
JURISDICTION AND VENUE
6. The Court has jurisdiction over this action pursuant to Sections 20(b)
and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b) and 77v(a)], and Sections 21(d)
and 27(a) of the Exchange Act [15 U.S.C. §§78u(d) and 78aa(a)].
7. Venue is proper in this judicial district pursuant to Section 22(a) of
the Securities Act [15 U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15
U.S.C. § 78aa(a)], because many of the acts, transactions and courses of business
constituting the violations alleged in this Complaint occurred within the
jurisdiction of this district.
8. In connection with the conduct alleged in this Complaint, the
Defendants, directly and indirectly, have made use of the mails and/or means or
instrumentalities of transportation or communication in interstate commerce.
DEFENDANTS
9. Defendant Joseph Michael Todd, age 59, is a resident of Panama
City, Florida.  Todd has worked in the securities industry since 1988 at various
registered broker-dealers and investment advisers.  Between August 2016 and

July 2022, Todd was a registered representative and investment adviser
representative associated with Broker A, an SEC-registered firm that is dually
registered as a broker-dealer and investment adviser.  On January 23, 2023, Todd
filed an Assignment for Benefit of Creditors action pending in the Circuit Court
of the Fifth Judicial Circuit in and for Citrus County, Florida, to effectuate the
liquidation and distribution of his assets to creditors.  In re Assignment for the
Benefit of Creditors of Joseph Michael Todd, No. 2023-CA-000052 (Fla. Citrus Cty.
Ct.).
10. Todd Financial Services, LLC (“TFS”), is a Florida limited liability
company with its principal place of business in Crystal River, Florida.  Todd is
the owner and managing member of the entity and controlled the entity’s
operations and bank accounts.  Todd used TFS as a d/b/a for the brokerage
services he provided as a registered representative of Broker A, and TFS was
registered as a branch office of Broker A where Todd conducted sales and
investment advisory services.
11.   TFS Insurance Services LLC (“TFS Insurance”), is a Florida limited
liability company with its principal place of business in Crystal River, Florida.
Todd is the owner and managing member of the entity and controlled the entity’s
operations and bank accounts.  TFS Insurance held itself out as an insurance

brokerage service, but Todd also told investors that he made investments in
products such as variable index-linked annuities through the entity.
RELATED ENTITY
12. Broker A, headquartered in Anaheim, California, has been
registered with the SEC as a broker-dealer since 1993 and as an investment
adviser since 1999.
FACTS
Todd Fraudulently Raised Funds from
Customers

13. Todd received his first securities license in 1988.  From August 1988
until July 2022, Todd was a registered representative and investment adviser
representative associated with various SEC-registered broker-dealers and
investment advisers, most recently with Broker A.  He provided advice to
customers and potential customers about investments in securities.  Todd’s
compensation at Broker A was a percentage payout based on all compensable
commissions, trailing commissions and advisory fee revenues received by Broker
A based on Todd’s activities.
14. Beginning in at least August 2016, Todd conducted a fraudulent
scheme that defrauded at least 20 of his brokerage customers, most of whom
were senior citizens, retirees, or individuals with disabilities.  Todd induced

customers to send him money by falsely representing to customers that he would
invest their funds in securities.  Todd then subsequently misappropriated funds
for personal use.
15. As part of the scheme, Todd instructed certain of his Broker A
customers to make checks payable to TFS and TFS Insurance (collectively “Todd
LLCs”), rather than to Broker A.  These customers did not question Todd about
his instructions because they trusted him, understood he was a licensed and
registered investment professional, and believed he was acting in his capacity as
an investment professional and would be purchasing legitimate securities on
their behalf.  These customers in turn believed that Todd would only execute
transactions on their behalf through appropriate channels and as authorized.
16. The customers relied on Todd’s recommendations and believed that
Todd only recommended securities that aligned with their investment goals and
risk tolerance.
17. Adding further to the confusion, Todd’s marketing materials for
TFS—such as his website—provided his Centaurus email address and read,
“Securities and Advisory services offered through Centaurus Financial, Inc.,
member FINRA and SIPC.”  In addition, TFS was a branch office of Broker A.  As
a result, his customers believed that the Todd LLCs were affiliated with and/or
synonymous with Broker A.

18.
Some customers wrote on the payee or memo line of their checks the
specific security that Todd had recommended and that the customer thought
Todd was purchasing on their behalf.
19. In some cases, Todd told customers their funds would be invested in
specific stocks or investment funds such as Fund A—a registered closed-end
fund that invested in collateralized loan obligations.  In reality, Todd spent the
funds for personal use and did not purchase the securities.
20. In some cases, Todd, through TFS, offered customers the
opportunity to invest in fictional investments, such as the “CRTFS Mortgage
Fund.”  In reality, no such investment fund existed and Todd spent the funds for
personal use.
21. Although certain customers pressed Todd for additional detail
concerning CRTFS Mortgage Fund, Todd described it only in vague terms.  Todd
indicated that the fund was a group of investors consisting of Todd and other
business associates who purchased mortgages on local properties.
22. In other cases, Todd directed customers to send money to TFS
Insurance.  Todd represented that he would in turn invest those funds in certain
investment products including variable index-linked annuities.

23.
In other cases, Todd told customers their money would be secure in
clearing firm custody accounts and would be invested in securities at a future
time.  In reality, Todd spent the money for personal use.
24. For example, at his very first meeting with one couple (“Couple A”)
in approximately August 2021, Todd provided Couple A with a list of five
entities to which they should write their checks.  Todd directed Couple A to
make three of the checks payable to appropriate Broker A-approved channels
such as to Broker A’s clearing firm or directly to the issuers of the desired
securities.  However, Todd also instructed Couple A to write two checks totaling
$600,000 to TFS and TFS Insurance.
25. Todd told Couple A that he would be investing the funds they made
payable to TFS Insurance and TFS in securities offered through Broker A and
that the securities would be part of their Broker A investment portfolio.
26. The customers who made checks payable to Todd or the Todd LLCs
believed that Todd was, at all times, acting in his capacity as a Broker A
representative, that his actions and recommendations were sanctioned by Broker
A, and that he would be purchasing legitimate securities on their behalf.
27. In total, customers wrote checks to Todd directly totaling at least
$15,045, to TFS totaling at least $2.5 million, and to TFS Insurance totaling at least
$526,654.

28.
Since at least August 2016, Todd misappropriated at least $3 million
in funds that certain of his customers sent directly to Todd or the Todd LLCs.
Contrary to Todd’s promises to these customers, he never purchased any
investments and/or secured the funds in custody accounts for future
reinvestment.
Todd Misappropriated His Customers’ Life Savings
to Finance His Lifestyle

29. As customer funds began flowing into Todd’s and the Todd LLCs’
bank accounts, Todd commingled and transferred the funds between various
accounts under his control, and used the funds for a variety of personal
expenditures.  Since at least 2019, Todd spent more than $450,000 on boats, more
than $230,000 on a luxury condominium in Mexico Beach, Florida, more than
$65,600 on hunting and hunting equipment, more than $275,000 on tractors and
farm equipment, more than $11,000 at casinos and adult entertainment venues.
Todd also wrote $568,000 in checks to himself.
30. In the case of one customer, a 78-year old widow, Todd would
routinely boast to her about his lavish lifestyle, including his purchase of a
condominium in Mexico Beach, a new truck, his membership in a hunting club,
and his gambling winnings at various casinos.  Unbeknownst to this customer,
Todd’s activities were financed in large part by certain of his customers’ stolen

assets rather than any business acumen or other form of legitimate means on the
part of Todd.
31. From at least September 2016 to approximately December 2022,
Todd also made Ponzi-like payments to at least one customer by using other
customers’ funds to make regular deposits from a TFS bank account into this
customer’s account, which he falsely claimed were interest payments or regular
distributions on an investment.
Todd Fabricated Investment Projections and Account Statements
to Induce and Then Conceal His Fraud

32. As alleged above in paragraphs 13-31, despite his promises, Todd
never bought the recommended securities or other products for his customers,
nor did he ensure their funds were safeguarded in custody accounts as
promised.
33. In several cases, Todd reassured customers that their funds would
be invested in products that were consistent with a low or moderate risk profile.
Todd went further and promised some customers that their investments would
earn a “minimum” 5% return, or that their principal investment would never
lose money.  In reality, the funds that these unsuspecting customers gave to
Todd and the Todd LLCs earned no return because Todd never invested them as
he promised and instead spent the money to fund his lifestyle.

34.
In order to continue his scheme, when pressed by certain customers
for documentation concerning their investment holdings, Todd presented those
customers with forged account statements or portfolio holdings statements that
contained falsified entries indicating the customers were invested in the products
promised by Todd.
35. For example, beginning in approximately January 2021, Todd
regularly provided one married couple—a 76-year old retiree and his disabled
veteran wife—with holdings statements purporting to show the balance of their
funds invested in CRTFS Mortgage Fund for which they had written a check
totaling $200,000 to TFS.  In reality, the mortgage fund never existed and was
entirely fabricated by Todd.
36. Todd intentionally deceived these customers with false assurances
and, in several cases, through use of falsified entries in the portfolio holdings
statements that Todd provided to them.  In some cases, investors made subsequent
investments with Todd after receiving fabricated statements from him.
Todd Continued to Lie to and Solicit Customers
Months after His Termination from Broker A

37. In at least one case, and several months after his termination from
Broker A in July 2022, Todd continued to pressure Couple A to transfer

additional funds to him to be invested, despite the fact that he was no longer
associated with a registered broker-dealer or investment adviser.
38. At the time of Todd’s termination from Broker A in July 2022,
Couple A had already invested nearly $3 million with Todd at Broker A—money
the couple received as part of a devastating workplace injury settlement that
resulted in a long-term disability.
39. Of the amounts that Couple A entrusted to Todd, as outlined in
paragraphs 24 and 25, $600,000 was never invested as they directed Todd to do.
Instead, Todd stole the funds for his own use.
40. In September 2022, Todd lied to Couple A and informed them that
he was leaving Broker A to work at a large, global investment company and that
he planned to move their accounts to the new firm once all his “paperwork” was
complete.  Todd was aware that these customers were anticipating a large final
settlement installment check of $700,000 from their worker’s compensation case.
41. In November 2022, Todd flew out to Couple A’s home to “sign them
up” at the new firm and to transfer their accounts over.  However, upon arrival,
Todd informed Couple A that the paperwork was not ready, and pressed them
for more detail regarding the anticipated final settlement installment check.
42. Subsequently, Couple A grew more suspicious about Todd’s
activities and learned that neither Todd nor Broker A could adequately account

for the $600,000 that Couple A had previously written in checks to the Todd
LLCs in August 2021.
Conclusion
43. As Todd’s customers began confronting him with more and more
questions about what he had done with their funds, Todd eventually stopped
responding to their calls and messages altogether.
44. Several of the customers who wrote checks to Todd or Todd’s LLCs
now find themselves listed as “unsecured creditors” on Todd’s pending Action
for the Benefit of Creditors, despite never having agreed to serve as any type of
creditor for Todd or his entities.
45. Todd violated the trust of the defrauded customers when he used
their funds to bankroll his lifestyle.  Todd has defrauded his customers out of at
least $3 million and has caused them devastating losses.
COUNT I
Violations of Section 17(a) of the Securities Act
[15 U.S.C. § 77q(a)]
(Todd and TFS)

46. Paragraphs 1 through 45 are realleged and incorporated by reference
as though fully set forth herein.
47. By engaging in the conduct described above, Defendants Todd and
TFS, in the offer and sale of securities, by the use of the means and instruments of
transportation or communication in interstate commerce or by use of the mails,

directly or indirectly, (i) employed devices, schemes and artifices to defraud; (ii)
obtained money and property by means of untrue statements of material facts
and omissions to state material facts necessary in order to make the statements
made, in light of the circumstances under which they were made, not
misleading; and (iii) engaged in transactions, practices, and courses of business
which operated or would operate as a fraud or deceit upon the purchasers of
such securities.
48. Defendants Todd and TFS acted intentionally, knowingly,
recklessly, or negligently, in engaging in the conduct described above.
49. By engaging in the conduct described above, Defendants Todd and
TFS violated Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].
COUNT II
Violations of Section 10(b) of the Exchange Act
and Exchange Act Rule 10b-5
[15 U.S.C. § 78j(b) and 17 C.F.R. 240.10b-5]
(Todd, TFS, and TFS Insurance)
50. Paragraphs 1 through 45 are realleged and incorporated by reference
as though fully set forth herein.
51. By engaging in the conduct described above, Defendants Todd, TFS,
and TFS Insurance, in connection with the purchase and sale of securities, by the
use of the means and instrumentalities of interstate commerce and by the use of
the mails, directly and indirectly, (i) employed devices, schemes and artifices to

defraud; (ii) made untrue statements of material fact and omitted to state
material facts necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading; and (iii) engaged in
acts, practices and courses of business which operated or would have operated as
a fraud and deceit upon purchasers and sellers and prospective purchasers and
sellers of securities.
52. Defendants Todd, TFS, and TFS Insurance acted intentionally,
knowingly, or recklessly, in engaging in the fraudulent conduct described above.
53. Through the foregoing, Defendants Todd, TFS, and TFS Insurance
violated Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. 240.10b-5].
RELIEF REQUESTED
 THEREFORE, the SEC requests that this Court:
I.
 Permanently restrain and enjoin Defendants Todd, TFS, and TFS Insurance
from violating, directly or indirectly, Section 10(b) of the Securities Exchange Act
of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Exchange Act Rule 10b-5 [17
C.F.R. § 240.10b-5], by using any means or instrumentality of interstate
commerce, or of the mails, or of any facility of any national securities exchange,
in connection with the purchase or sale of any security:

(a) to employ any device, scheme, or artifice to defraud;
(b) to make any untrue statement of a material fact, or to omit to state a
material fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not
misleading; or
(c) to engage in any act, practice, or course of business which operates
or would operate as a fraud or deceit upon any person
by, directly or indirectly, (i) creating a false appearance or otherwise deceiving
any person, or (ii) disseminating false or misleading documents, materials, or
information or making, either orally or in writing, any false or misleading
statement in any communication with any investor or prospective investor,
about:
(A) matters relating to a decision by an investor or prospective
investor to buy or sell securities of any company,
(B) any investment strategy or investment in securities,
(C) the prospects for success of any product or company,
(D) the use of investor funds,
(E) compensation to any person,
(F) any offering of securities,
(G) the registration status of such offering or of such securities,

(H) Defendants’ qualifications to advise investors, or
(I) the misappropriation of investor funds or investment
proceeds.
II.
 Permanently restrain and enjoin Defendants Todd and TFS from violating
Section 17(a) of the Securities Act of 1933 (the “Securities Act”) [15 U.S.C. §
77q(a)] in the offer or sale of any security by the use of any means or instruments
of transportation or communication in interstate commerce or by use of the
mails, directly or indirectly:
(a) to employ any device, scheme, or artifice to defraud;
(b) to obtain money or property by means of any untrue statement of
a material fact or any omission of a material fact necessary in
order to make the statements made, in light of the circumstances
under which they were made, not misleading; or
(c) to engage in any transaction, practice, or course of business
which operates or would operate as a fraud or deceit upon the
purchaser
by, directly or indirectly, (i) creating a false appearance or otherwise deceiving
any person, or (ii) disseminating false or misleading documents, materials, or
information or making, either orally or in writing, any false or misleading

statement in any communication with any investor or prospective investor,
about:
(A) matters relating to a decision by an investor or prospective
investor to buy or sell securities of any company,
(B) any investment strategy or investment in securities,
(C) the prospects for success of any product or company,
(D) any offering of securities,
(E) the registration status of such offering or of such securities,
(F) the use of investor funds,
(G) compensation to any person,
(H) Defendants’ qualifications to advise investors, or
(I) the misappropriation of investor funds or investment
proceeds.
III.
 Permanently restrain and enjoin Defendants Todd, TFS, and TFS Insurance
from directly or indirectly, including, but not limited to, through any entity
owned or controlled by Defendants, participating in the issuance, purchase,
offer, or sale of any security; provided, however, that such injunction shall not
prevent Defendants from purchasing or selling securities for their own personal
accounts;

IV.

 Enter an Order, pursuant to Section 20(e) of the Securities Act [15 U.S.C. §
77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]
permanently prohibiting Defendant Todd from acting as an officer or director of
any issuer that has a class of securities registered pursuant to Section 12 [15
U.S.C. § 78l] of the Exchange Act or that is required to file reports pursuant to
Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)];
V.
 Order Defendants Todd and TFS to pay disgorgement of ill-gotten gains,
prejudgment interest thereon, and civil penalties pursuant to Section 20(d) of the
Securities Act [15 U.S.C. § 77t(d)] and Section 21(d) of the Exchange Act [15
U.S.C. § 78(d)] in amounts to be determined by the Court upon motion of the
SEC; and Defendant TFS Insurance to pay disgorgement of ill-gotten gains,
prejudgment interest thereon, and civil penalties pursuant to Section 21(d) of the
Exchange Act [15 U.S.C. § 78u(d)] in amounts to be determined by the Court
upon motion of the SEC; and
VI.
 Grant any other relief this Court deems appropriate.

Dated:  July 12, 2023            Respectfully         Submitted,

UNITED STATES SECURITIES AND
EXCHANGE COMMISSION

 /s/Daniel J. Hayes
Daniel J. Hayes, Illinois Bar No. 6243089
Caryn Trombino, Illinois Bar No. 6284159
U.S. Securities and Exchange Commission
Chicago Regional Office
175 West Jackson Blvd., Suite 1450
Chicago, Illinois 60604
(312) 353-7390
(312) 353-7398 (facsimile)
[email protected]
[email protected]

UNITED STATES DISTRICT COURT FOR THE  
MIDDLE DISTRICT OF FLORIDA 

OCALA DIVISION 
 
         
UNITED STATES SECURITIES     
AND EXCHANGE COMMISSION,   
          Case No. 5:23-cv-00431 
   Plaintiff,      

           
   v.            
          
JOSEPH MICHAEL TODD, 
TODD FINANCIAL SERVICES, LLC, and 
TFS INSURANCE SERVICES LLC, 
        
   Defendants.         
_____________________________________/ 
 

COMPLAINT 

 Plaintiff, the United States Securities and Exchange Commission (“SEC”), 

alleges as follows:   

SUMMARY OF ACTION 

1. From at least August 2016 through at least November 2022, 

Defendant Joseph Michael Todd (“Todd”) engaged in a fraudulent scheme and 

misappropriated at least $3 million from at least 20 customers of “Broker A,” a 

dually registered broker-dealer and investment adviser that employed Todd as 

a registered representative.  Todd obtained investor funds through deceptive 

means by instructing his Broker A customers to write checks payable to his 

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entities Todd Financial Services, LLC (“TFS”) and/or TFS Insurance Services LLC 

(“TFS Insurance”) or to Todd by falsely assuring customers that he and his 

entities would invest their funds in various securities.  Instead, Todd 

commingled investors’ funds and kept the money for his own personal use, 

spending it on lavish real estate, boating, hunting, casinos, and adult 

entertainment.  Todd perpetuated the fraud by making material 

misrepresentations to customers regarding the use of their funds in meetings 

that took place in person, in phone conversations, and in documents that he 

prepared and provided to customers. 

2. Because of their conduct, Todd, TFS, and TFS Insurance knowingly 

or recklessly committed securities fraud.   

3. Todd and TFS violated Section 17(a) of the Securities Act of 1933 (the 

“Securities Act”) [15 U.S.C. §§ 77e(a), 77e(c), and 77q(a)] and Todd, TFS, and TFS 

Insurance violated Section 10(b) of the Securities Exchange Act of 1934 (the 

“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 

240.10b-5]. 

4. The SEC brings this lawsuit to prevent further harm to investors and 

to seek disgorgement, civil penalties, permanent injunctions, and conduct-based 

injunctions stemming from the Defendants’ wrongdoing, and a permanent 

officer-and-director bar against Todd. 

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5. Unless the Defendants are permanently restrained and enjoined, 

they will continue to engage in the acts, practices, and courses of business set 

forth in this Complaint and in acts, practices, and courses of business of similar 

type and object.  

JURISDICTION AND VENUE 

6. The Court has jurisdiction over this action pursuant to Sections 20(b) 

and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b) and 77v(a)], and Sections 21(d) 

and 27(a) of the Exchange Act [15 U.S.C. §§78u(d) and 78aa(a)]. 

7. Venue is proper in this judicial district pursuant to Section 22(a) of 

the Securities Act [15 U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15 

U.S.C. § 78aa(a)], because many of the acts, transactions and courses of business 

constituting the violations alleged in this Complaint occurred within the 

jurisdiction of this district. 

8. In connection with the conduct alleged in this Complaint, the 

Defendants, directly and indirectly, have made use of the mails and/or means or 

instrumentalities of transportation or communication in interstate commerce. 

DEFENDANTS 

9. Defendant Joseph Michael Todd, age 59, is a resident of Panama 

City, Florida.  Todd has worked in the securities industry since 1988 at various 

registered broker-dealers and investment advisers.  Between August 2016 and 

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July 2022, Todd was a registered representative and investment adviser 

representative associated with Broker A, an SEC-registered firm that is dually 

registered as a broker-dealer and investment adviser.  On January 23, 2023, Todd 

filed an Assignment for Benefit of Creditors action pending in the Circuit Court 

of the Fifth Judicial Circuit in and for Citrus County, Florida, to effectuate the 

liquidation and distribution of his assets to creditors.  In re Assignment for the 

Benefit of Creditors of Joseph Michael Todd, No. 2023-CA-000052 (Fla. Citrus Cty. 

Ct.). 

10. Todd Financial Services, LLC (“TFS”), is a Florida limited liability 

company with its principal place of business in Crystal River, Florida.  Todd is 

the owner and managing member of the entity and controlled the entity’s 

operations and bank accounts.  Todd used TFS as a d/b/a for the brokerage 

services he provided as a registered representative of Broker A, and TFS was 

registered as a branch office of Broker A where Todd conducted sales and 

investment advisory services.   

11.   TFS Insurance Services LLC (“TFS Insurance”), is a Florida limited 

liability company with its principal place of business in Crystal River, Florida.  

Todd is the owner and managing member of the entity and controlled the entity’s 

operations and bank accounts.  TFS Insurance held itself out as an insurance 

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brokerage service, but Todd also told investors that he made investments in 

products such as variable index-linked annuities through the entity. 

RELATED ENTITY 

12. Broker A, headquartered in Anaheim, California, has been 

registered with the SEC as a broker-dealer since 1993 and as an investment 

adviser since 1999. 

FACTS 

Todd Fraudulently Raised Funds from 
Customers 

 

13. Todd received his first securities license in 1988.  From August 1988 

until July 2022, Todd was a registered representative and investment adviser 

representative associated with various SEC-registered broker-dealers and 

investment advisers, most recently with Broker A.  He provided advice to 

customers and potential customers about investments in securities.  Todd’s 

compensation at Broker A was a percentage payout based on all compensable 

commissions, trailing commissions and advisory fee revenues received by Broker 

A based on Todd’s activities. 

14. Beginning in at least August 2016, Todd conducted a fraudulent 

scheme that defrauded at least 20 of his brokerage customers, most of whom 

were senior citizens, retirees, or individuals with disabilities.  Todd induced 

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customers to send him money by falsely representing to customers that he would 

invest their funds in securities.  Todd then subsequently misappropriated funds 

for personal use.  

15. As part of the scheme, Todd instructed certain of his Broker A 

customers to make checks payable to TFS and TFS Insurance (collectively “Todd 

LLCs”), rather than to Broker A.  These customers did not question Todd about 

his instructions because they trusted him, understood he was a licensed and 

registered investment professional, and believed he was acting in his capacity as 

an investment professional and would be purchasing legitimate securities on 

their behalf.  These customers in turn believed that Todd would only execute 

transactions on their behalf through appropriate channels and as authorized.   

16. The customers relied on Todd’s recommendations and believed that 

Todd only recommended securities that aligned with their investment goals and 

risk tolerance.  

17. Adding further to the confusion, Todd’s marketing materials for 

TFS—such as his website—provided his Centaurus email address and read, 

“Securities and Advisory services offered through Centaurus Financial, Inc., 

member FINRA and SIPC.”  In addition, TFS was a branch office of Broker A.  As 

a result, his customers believed that the Todd LLCs were affiliated with and/or 

synonymous with Broker A. 

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18. Some customers wrote on the payee or memo line of their checks the 

specific security that Todd had recommended and that the customer thought 

Todd was purchasing on their behalf. 

19. In some cases, Todd told customers their funds would be invested in 

specific stocks or investment funds such as Fund A—a registered closed-end 

fund that invested in collateralized loan obligations.  In reality, Todd spent the 

funds for personal use and did not purchase the securities. 

20. In some cases, Todd, through TFS, offered customers the 

opportunity to invest in fictional investments, such as the “CRTFS Mortgage 

Fund.”  In reality, no such investment fund existed and Todd spent the funds for 

personal use. 

21. Although certain customers pressed Todd for additional detail 

concerning CRTFS Mortgage Fund, Todd described it only in vague terms.  Todd 

indicated that the fund was a group of investors consisting of Todd and other 

business associates who purchased mortgages on local properties.  

22. In other cases, Todd directed customers to send money to TFS 

Insurance.  Todd represented that he would in turn invest those funds in certain 

investment products including variable index-linked annuities. 

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23. In other cases, Todd told customers their money would be secure in 

clearing firm custody accounts and would be invested in securities at a future 

time.  In reality, Todd spent the money for personal use.     

24. For example, at his very first meeting with one couple (“Couple A”) 

in approximately August 2021, Todd provided Couple A with a list of five 

entities to which they should write their checks.  Todd directed Couple A to 

make three of the checks payable to appropriate Broker A-approved channels 

such as to Broker A’s clearing firm or directly to the issuers of the desired 

securities.  However, Todd also instructed Couple A to write two checks totaling 

$600,000 to TFS and TFS Insurance. 

25. Todd told Couple A that he would be investing the funds they made 

payable to TFS Insurance and TFS in securities offered through Broker A and 

that the securities would be part of their Broker A investment portfolio.  

26. The customers who made checks payable to Todd or the Todd LLCs 

believed that Todd was, at all times, acting in his capacity as a Broker A 

representative, that his actions and recommendations were sanctioned by Broker 

A, and that he would be purchasing legitimate securities on their behalf.   

27. In total, customers wrote checks to Todd directly totaling at least 

$15,045, to TFS totaling at least $2.5 million, and to TFS Insurance totaling at least 

$526,654.  

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28. Since at least August 2016, Todd misappropriated at least $3 million 

in funds that certain of his customers sent directly to Todd or the Todd LLCs.  

Contrary to Todd’s promises to these customers, he never purchased any 

investments and/or secured the funds in custody accounts for future 

reinvestment.  

Todd Misappropriated His Customers’ Life Savings  
to Finance His Lifestyle 

 

29. As customer funds began flowing into Todd’s and the Todd LLCs’ 

bank accounts, Todd commingled and transferred the funds between various 

accounts under his control, and used the funds for a variety of personal 

expenditures.  Since at least 2019, Todd spent more than $450,000 on boats, more 

than $230,000 on a luxury condominium in Mexico Beach, Florida, more than 

$65,600 on hunting and hunting equipment, more than $275,000 on tractors and 

farm equipment, more than $11,000 at casinos and adult entertainment venues.  

Todd also wrote $568,000 in checks to himself.  

30. In the case of one customer, a 78-year old widow, Todd would 

routinely boast to her about his lavish lifestyle, including his purchase of a 

condominium in Mexico Beach, a new truck, his membership in a hunting club, 

and his gambling winnings at various casinos.  Unbeknownst to this customer, 

Todd’s activities were financed in large part by certain of his customers’ stolen 

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assets rather than any business acumen or other form of legitimate means on the 

part of Todd.   

31. From at least September 2016 to approximately December 2022, 

Todd also made Ponzi-like payments to at least one customer by using other 

customers’ funds to make regular deposits from a TFS bank account into this 

customer’s account, which he falsely claimed were interest payments or regular 

distributions on an investment.   

Todd Fabricated Investment Projections and Account Statements 
to Induce and Then Conceal His Fraud 

 

32. As alleged above in paragraphs 13-31, despite his promises, Todd 

never bought the recommended securities or other products for his customers, 

nor did he ensure their funds were safeguarded in custody accounts as 

promised.  

33. In several cases, Todd reassured customers that their funds would 

be invested in products that were consistent with a low or moderate risk profile.  

Todd went further and promised some customers that their investments would 

earn a “minimum” 5% return, or that their principal investment would never 

lose money.  In reality, the funds that these unsuspecting customers gave to 

Todd and the Todd LLCs earned no return because Todd never invested them as 

he promised and instead spent the money to fund his lifestyle. 

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34. In order to continue his scheme, when pressed by certain customers 

for documentation concerning their investment holdings, Todd presented those 

customers with forged account statements or portfolio holdings statements that 

contained falsified entries indicating the customers were invested in the products 

promised by Todd.  

35. For example, beginning in approximately January 2021, Todd 

regularly provided one married couple—a 76-year old retiree and his disabled 

veteran wife—with holdings statements purporting to show the balance of their 

funds invested in CRTFS Mortgage Fund for which they had written a check 

totaling $200,000 to TFS.  In reality, the mortgage fund never existed and was 

entirely fabricated by Todd.    

36. Todd intentionally deceived these customers with false assurances 

and, in several cases, through use of falsified entries in the portfolio holdings 

statements that Todd provided to them.  In some cases, investors made subsequent 

investments with Todd after receiving fabricated statements from him. 

Todd Continued to Lie to and Solicit Customers  
Months after His Termination from Broker A 

 

37. In at least one case, and several months after his termination from 

Broker A in July 2022, Todd continued to pressure Couple A to transfer 

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additional funds to him to be invested, despite the fact that he was no longer 

associated with a registered broker-dealer or investment adviser. 

38. At the time of Todd’s termination from Broker A in July 2022, 

Couple A had already invested nearly $3 million with Todd at Broker A—money 

the couple received as part of a devastating workplace injury settlement that 

resulted in a long-term disability.  

39. Of the amounts that Couple A entrusted to Todd, as outlined in 

paragraphs 24 and 25, $600,000 was never invested as they directed Todd to do.  

Instead, Todd stole the funds for his own use.  

40. In September 2022, Todd lied to Couple A and informed them that 

he was leaving Broker A to work at a large, global investment company and that 

he planned to move their accounts to the new firm once all his “paperwork” was 

complete.  Todd was aware that these customers were anticipating a large final 

settlement installment check of $700,000 from their worker’s compensation case.   

41. In November 2022, Todd flew out to Couple A’s home to “sign them 

up” at the new firm and to transfer their accounts over.  However, upon arrival, 

Todd informed Couple A that the paperwork was not ready, and pressed them 

for more detail regarding the anticipated final settlement installment check.    

42. Subsequently, Couple A grew more suspicious about Todd’s 

activities and learned that neither Todd nor Broker A could adequately account 

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for the $600,000 that Couple A had previously written in checks to the Todd 

LLCs in August 2021.   

Conclusion 

43. As Todd’s customers began confronting him with more and more 

questions about what he had done with their funds, Todd eventually stopped 

responding to their calls and messages altogether. 

44. Several of the customers who wrote checks to Todd or Todd’s LLCs 

now find themselves listed as “unsecured creditors” on Todd’s pending Action 

for the Benefit of Creditors, despite never having agreed to serve as any type of 

creditor for Todd or his entities.  

45. Todd violated the trust of the defrauded customers when he used 

their funds to bankroll his lifestyle.  Todd has defrauded his customers out of at 

least $3 million and has caused them devastating losses. 

COUNT I 
Violations of Section 17(a) of the Securities Act 

[15 U.S.C. § 77q(a)] 
(Todd and TFS) 

 
46. Paragraphs 1 through 45 are realleged and incorporated by reference 

as though fully set forth herein. 

47. By engaging in the conduct described above, Defendants Todd and 

TFS, in the offer and sale of securities, by the use of the means and instruments of 

transportation or communication in interstate commerce or by use of the mails, 

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directly or indirectly, (i) employed devices, schemes and artifices to defraud; (ii) 

obtained money and property by means of untrue statements of material facts 

and omissions to state material facts necessary in order to make the statements 

made, in light of the circumstances under which they were made, not 

misleading; and (iii) engaged in transactions, practices, and courses of business 

which operated or would operate as a fraud or deceit upon the purchasers of 

such securities.  

48. Defendants Todd and TFS acted intentionally, knowingly, 

recklessly, or negligently, in engaging in the conduct described above.   

49. By engaging in the conduct described above, Defendants Todd and 

TFS violated Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]. 

COUNT II 
Violations of Section 10(b) of the Exchange Act 

and Exchange Act Rule 10b-5 
[15 U.S.C. § 78j(b) and 17 C.F.R. 240.10b-5] 

(Todd, TFS, and TFS Insurance) 

50. Paragraphs 1 through 45 are realleged and incorporated by reference 

as though fully set forth herein. 

51. By engaging in the conduct described above, Defendants Todd, TFS, 

and TFS Insurance, in connection with the purchase and sale of securities, by the 

use of the means and instrumentalities of interstate commerce and by the use of 

the mails, directly and indirectly, (i) employed devices, schemes and artifices to 

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defraud; (ii) made untrue statements of material fact and omitted to state 

material facts necessary in order to make the statements made, in the light of the 

circumstances under which they were made, not misleading; and (iii) engaged in 

acts, practices and courses of business which operated or would have operated as 

a fraud and deceit upon purchasers and sellers and prospective purchasers and 

sellers of securities. 

52. Defendants Todd, TFS, and TFS Insurance acted intentionally, 

knowingly, or recklessly, in engaging in the fraudulent conduct described above.  

53. Through the foregoing, Defendants Todd, TFS, and TFS Insurance 

violated Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 

thereunder [17 C.F.R. 240.10b-5].   

RELIEF REQUESTED 

 THEREFORE, the SEC requests that this Court: 

I.  

 Permanently restrain and enjoin Defendants Todd, TFS, and TFS Insurance 

from violating, directly or indirectly, Section 10(b) of the Securities Exchange Act 

of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Exchange Act Rule 10b-5 [17 

C.F.R. § 240.10b-5], by using any means or instrumentality of interstate 

commerce, or of the mails, or of any facility of any national securities exchange, 

in connection with the purchase or sale of any security: 

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(a) to employ any device, scheme, or artifice to defraud; 

(b) to make any untrue statement of a material fact, or to omit to state a 

material fact necessary in order to make the statements made, in the 

light of the circumstances under which they were made, not 

misleading; or  

(c) to engage in any act, practice, or course of business which operates 

or would operate as a fraud or deceit upon any person  

by, directly or indirectly, (i) creating a false appearance or otherwise deceiving 

any person, or (ii) disseminating false or misleading documents, materials, or 

information or making, either orally or in writing, any false or misleading 

statement in any communication with any investor or prospective investor, 

about:   

(A) matters relating to a decision by an investor or prospective 

investor to buy or sell securities of any company, 

(B) any investment strategy or investment in securities,  

(C) the prospects for success of any product or company, 

(D) the use of investor funds,  

(E) compensation to any person,  

(F) any offering of securities,  

(G) the registration status of such offering or of such securities,  

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(H) Defendants’ qualifications to advise investors, or  

(I) the misappropriation of investor funds or investment 

proceeds.  

II.  

 Permanently restrain and enjoin Defendants Todd and TFS from violating 

Section 17(a) of the Securities Act of 1933 (the “Securities Act”) [15 U.S.C. § 

77q(a)] in the offer or sale of any security by the use of any means or instruments 

of transportation or communication in interstate commerce or by use of the 

mails, directly or indirectly: 

(a) to employ any device, scheme, or artifice to defraud; 

(b) to obtain money or property by means of any untrue statement of 

a material fact or any omission of a material fact necessary in 

order to make the statements made, in light of the circumstances 

under which they were made, not misleading; or 

(c) to engage in any transaction, practice, or course of business 

which operates or would operate as a fraud or deceit upon the 

purchaser 

by, directly or indirectly, (i) creating a false appearance or otherwise deceiving 

any person, or (ii) disseminating false or misleading documents, materials, or 

information or making, either orally or in writing, any false or misleading 

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statement in any communication with any investor or prospective investor, 

about:   

(A) matters relating to a decision by an investor or prospective 

investor to buy or sell securities of any company, 

(B) any investment strategy or investment in securities,  

(C) the prospects for success of any product or company, 

(D) any offering of securities,  

(E) the registration status of such offering or of such securities,  

(F) the use of investor funds,  

(G) compensation to any person,  

(H) Defendants’ qualifications to advise investors, or  

(I) the misappropriation of investor funds or investment 

proceeds. 

III.  

 Permanently restrain and enjoin Defendants Todd, TFS, and TFS Insurance 

from directly or indirectly, including, but not limited to, through any entity 

owned or controlled by Defendants, participating in the issuance, purchase, 

offer, or sale of any security; provided, however, that such injunction shall not 

prevent Defendants from purchasing or selling securities for their own personal 

accounts;  

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IV.   

 Enter an Order, pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 

77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)] 

permanently prohibiting Defendant Todd from acting as an officer or director of 

any issuer that has a class of securities registered pursuant to Section 12 [15 

U.S.C. § 78l] of the Exchange Act or that is required to file reports pursuant to 

Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)]; 

V.   

 Order Defendants Todd and TFS to pay disgorgement of ill-gotten gains, 

prejudgment interest thereon, and civil penalties pursuant to Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)] and Section 21(d) of the Exchange Act [15 

U.S.C. § 78(d)] in amounts to be determined by the Court upon motion of the 

SEC; and Defendant TFS Insurance to pay disgorgement of ill-gotten gains, 

prejudgment interest thereon, and civil penalties pursuant to Section 21(d) of the 

Exchange Act [15 U.S.C. § 78u(d)] in amounts to be determined by the Court 

upon motion of the SEC; and 

VI.  

 Grant any other relief this Court deems appropriate. 

  

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Dated:  July 12, 2023    Respectfully Submitted, 
 

 
UNITED STATES SECURITIES AND 
EXCHANGE COMMISSION 
 
 /s/Daniel J. Hayes  
Daniel J. Hayes, Illinois Bar No. 6243089 
Caryn Trombino, Illinois Bar No. 6284159 
U.S. Securities and Exchange Commission 
Chicago Regional Office 
175 West Jackson Blvd., Suite 1450 
Chicago, Illinois 60604 
(312) 353-7390 
(312) 353-7398 (facsimile) 
[email protected] 
[email protected] 

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