Broker Breard pleads guilty to mail fraud in theft of $9.4 million from clients

Embattled Kirkland securities broker Rhonda Breard pleaded guilty Tuesday to mail fraud in connection with the theft of more than $9 million from her investment clients.

An emotional Breard spoke in a shaky voice, barely above a whisper, at a hearing in U.S. District Court when she agreed to surrender three homes and more than two dozen vehicles and boats.

But federal prosecutors said after the plea hearing that investigators have identified less than $1 million in assets that might be returned to her victims. Assistant U.S. Attorney Matthew Diggs said all three homes were "heavily mortgaged" and Breard had just $250,000 in cash and checks.

"It won't amount to anywhere near the total loss," he said.

Breard's attorney, Ronald Friedman, said his client has turned over "everything she has. Everything."

Mail fraud carries a maximum penalty of 20 years in prison and fines of up to $250,000. The 47-year-old Breard, however, is a first-time offender and cooperated when she was caught, which is expected to mitigate her sentence.

Still, the amount of the thefts, the number of victims and the fact that she was a licensed securities dealer engaged in securities fraud all increase the likelihood that she will spend years behind bars, according to Diggs and plea documents.

Diggs and Friedman agree that, under the guidelines — even taking into account her cooperation — Breard faces between seven and 10 years behind bars.

"She is going to prison," said Friedman. "She knows she's done wrong. She will be saying 'I'm sorry' for the rest of her life."

Breard told the judge that she was under the care of a physician and, when she raised her right hand to take an oath in court Tuesday, her armed was in a brace. In an earlier court appearance, both her arms were bandaged.

Friedman confirmed the injuries were the result of a suicide attempt.

U.S. Magistrate Judge James Donohue set sentencing for July 9.

A number of Breard's victims were in the courtroom and several gasped when the judge, reading from the plea agreement, said Breard owned 27 vehicles. Among them was Christopher Gren, whose wife Sandee, lost her retirement. He declined to say how much was involved: "It was enough to make a difference in our lives," he said.

Gren said he had considered Breard a close friend, and is saddened — and angry — about what happened.

"I'd like to talk to her," he said.

Breard, the manager and chief executive officer of Breard & Associates Wealth Management, was a licensed broker for the U.S. subsidiary of ING, the Dutch investment giant, and was authorized to sell securities under its name in nine states, including Washington.

ING Financial Partners pulled Breard's brokerage licenses after a surprise audit turned up a store of secret files of investors who, it turned out, had been bilked by Breard. The broker stole their money and then falsified their statements to hide the losses.

The thefts began in 2004, according to court documents.

Breard has since been banned permanently from being an investment broker, and federal prosecutors had moved to seize three houses — including a $2.6 million home on south Lake Washington — and 27 cars, trucks, boats and recreational vehicles. The vehicles include a 2009 Cadillac Escalade, a 2009 Mercedes-Benz SL 550, five snowmobiles, three Jet Skis and four all-terrain vehicles.

She was charged last month and released on her own recognizance.

Last week, prosecutors filed new a charge alleging she stole $9.4 million from 38 clients, an increase over the losses estimated by state Department of Financial Institutions regulators.

ING spokesman Dana Ripley said the company had assembled a team to work with investors.

Both Breard and ING have been the targets of civil lawsuits filed by some investors seeking to reclaim some part of their losses from Breard's forfeited property and ING, which the lawsuits claim licensed Breard and then did not do enough to monitor her business during the years the thefts were ongoing.

The suit also alleges that ING has a spotty history of regulating its brokers, and cites two recent examples where ING paid out a total of $5.5 million in restitution to investors who were bilked by ING-licensed brokers.

Mike Carter: 206-464-3706 or mcarter@seattletimes.com

Information from Seattle Times archives is included in this report