There are options for clients of former NYLife Securities LLC broker Stephen Mellinger III (CRD# 2819752). He was registered with NYLife Securities LLC in Niles, Michigan, from 2009 to 2016, when he was terminated regarding, “Mr. Mellinger resigned during the course of a review of outside business referrals. In the Company’s opinion, Mellinger exceeded the scope of approved business activities. Mr. Mellinger disputes the Company’s opinion.”
In September 2024, he was indicted in Mississippi based on allegations that, since 2013, he ran an illegal, multimillion-dollar tax shelter scheme. He was charged with conspiracy to defraud the United States, aiding in the preparation of false tax returns, conspiracy to commit wire fraud, conspiracy to commit money laundering and money laundering.
It is alleged that he used $3 million in the co-called royalties he received from his clients to buy a home for his personal use in Delray Beach, Florida. It is alleged that he defrauded the IRS by promoting the tax shelter. It is alleged that he stole client funds and laundered them. He faces a maximum sentence of 68 years in prison.
According to the release, he “allegedly instructed clients participating in the shelter, including clients in Mississippi, to transfer money to a company controlled by Mellinger or his co-conspirators in the amount they wished to claim as a deduction on their tax returns.” The complaint further alleges that “The conspirators then allegedly returned the money to a bank account that clients controlled less a percentage fee that they charged for their services. Even though tax shelter clients received their money back, Mellinger allegedly directed them to claim the transfer to the company as a deduction on their tax returns, and to label the deduction as a “royalty” payment.” It is alleged that he earned more than $3 million in fees from the shelter.
In January 2016, “the federal government seized funds from some of his clients, who were engaged in a scheme to defraud health care benefit programs, including TRICARE, the U.S. Department of Defense’s health care benefit program,” according to the U.S. Department of Justice. “Mellinger conspired with a close relative to take advantage of the seizure to steal some of the money that those clients had transferred through the tax shelter. Mellinger then allegedly laundered the stolen funds, which he knew were proceeds of healthcare fraud.”
Stephen Mellinger III Customer Complaints
He has been the subject of six customer complaints between 2006 and 2021, one of which was closed without action, according to his CRD report. The most recent complaints were regarding:
April 2021. “The customers allege that beginning in February 2016, as a result of misrepresentations and without full disclosure, they set up trusts, funded by life insurance, and donor-advised funds that promised substantial charitable deductions that would reduce federal income taxes.” The customer sought $1,440,833.33 in damages, and the case was settled for $227,525.16. The complaint was regarding mutual fund and insurance losses, and it took place while he was registered with NYLife Securities LLC.
October 2017. “Attorney for customers alleges that they were sold variable universal life insurance policies in June 2014 they could not afford to fund a retirement plan. Customers request the return all fees paid to the Firm and attorneys’ fees.” The customer sought $113,834 in damages, and the case was settled for $113,834. The complaint was regarding insurance losses, and it took place while he was registered with NYLife Securities LLC.
July 2016. “Customer alleges that they were taken advantage which caused financial hardship. Customer wants 3 VUL policies rescinded. Dates: 12/02/2014 -07/18/2016.” The customer sought $92,544.51 in damages, and the case was settled for $241,900. The complaint was regarding insurance losses, and it took place while he was registered with NYLife Securities LLC.
May 2016. “Customer alleges, among other things, that he does not fully understand the manner in which his investments were structured. He also states that he later discovered that some of his insurance policies were not being paid as had been discussed. Customer states that his assets have been drained over $1,000,000.00. DATES:10/15/2009-5/23/16.” The customer sought $1,000,000 in damages, and the case was settled for $189,216.84. The complaint was regarding fixed annuities, variable annuities, and equity OTC losses, and it took place while he was registered with NYLife Securities LLC.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, NYLife Securities LLC may be liable for investment or other losses suffered by Stephen Mellinger III’s customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.
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