Investment Adviser Stole Clients' Money

He stole millions from his clients, now a former Bay Area investment adviser prepares to learn his punishment for his crimes.

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    NEWSLETTERS

    Stephen Kobayashi's former employer UBS issued the following statement about this story: "Mr. Kobayashi who resigned from UBS in September 2009, acted on his own and committed criminal acts. As soon as Mr. Kobayashi's misconduct came to the firm's attention, we reported it to the SEC and other government authorities. Mr. Kobayashi's actions do not represent the high standards of UBS." (Published Tuesday, Sep 13, 2011)

     When it comes to managing your life savings, many people go to a big name trusted investment firm, and UBS is a big name firm.

    That's where Stephen Kobayashi worked for years as a financial adviser. His clients trusted him with millions of dollars, believing he would invest their money wisely and honestly, securing them in their golden years.

    Jeffrey Feldman/Attorney, “You would expect when you go to a blue chip firm that you’re going to be dealing with someone with integrity, who knows what they’re doing.

      Instead, federal prosectors say Kobayashi flat out stole their money. Jeffrey Feldman, a San Francisco lawyer, is representing several of Kobayashi's former clients.“We know there was a lot of taking money to pay Paul He was stealing client money going back quite a few years, and it just hadn’t been caught," Feldman said.

      But Kobayashi did get caught.

    In a plea agreement with federal prosecutors back in June, he pleaded guilty to wire fraud and money laundering charges.

    He's expected to be sentenced this week but until that happens, he's been living at his parent's Livermore home, free to come and go as he pleases.

    We tried to talk to him as he was putting bags into a white Mercedes parked out front, but he was in no mood to talk to us, rushing into his garage without commenting. We did talk to his mother off camera, who says her entire family is devastated.  

    Court Documents outline Kobayashi's alleged crimes. The Security and Exchange Commission claims Kobayashi defrauded his customers out of millions of dollars. It all added up to more than $5.4 million.

    Federal prosecutors say he set up a private fund for his clients to invest in life settlement policies, and according to court papers, he siphoned his clients' money into his own bank account.

    The SEC says he spent the millions on prostitutes, gambling debts, and luxury cars. Kobayashi's alleged wrongdoing happened between 2006 and 2009, when he was a broker in the Walnut Creek offices of UBS Financial Services.

    Attorney Jeffrey Feldman believes UBS holds some responsibility for not realizing Kobayashi's wrongdoing sooner. "There’s no excuse for UBS not having caught Kobayashi in what he was doing," Feldman said.

       Feldman has filed civil lawsuits against Kobayashi and UBS in attempt to reclaim some of his clients' money. At least one family reached a confidential out of court settlement.

    We contacted UBS for an on-camera interview. They declined, but did give us this statement:

    "Mr. Kobayashi who resigned from UBS in September 2009, acted on his own and committed criminal acts. As soon as Mr. Kobayashi's misconduct came to the firm's attention, we reported it to the SEC and other government authorities. Mr. Kobayashi's actions do not represent the high standards of UBS."