A New York-based investor accused Edelman Financial Engines of “legitimizing illicit, fraudulent transactions on cryptocurrency” when it didn’t slam the brakes on her plan to liquidate her IRA account to invest in a scam.
According to the lawsuit filed in New York federal court, Stella Maksumova believed Edelman “would have her best interest at heart” when operating as her financial advisor.
“Instead, (Edelman) recommended a liquidation of her account to meet her objectives, when it knew or should have known its recommendation was unsuitable for (Maksumova’s) investment objectives and financial situation because the purported investment was on its way to a fraudster,” the complaint read.
But an Edelman Financial Engines spokesperson disputed the claims in a statement, arguing that Maksumova’s financial planner “advised her of the consequences” of the crypto investment, but that she refused to follow the advice.
“This case exemplifies why it is so important to hire a financial planner who will act in the client’s best interests and provide sound financial advice. It further exemplifies the importance of listening to your planner’s good counsel,” the spokesman said. “(Edelman Financial Engines) is a trusted industry leader, renowned for our longstanding commitment to client-first planning and a legacy of planners who always prioritize their clients.”
According to the complaint, Maksumova worked at CVS Pharmacy and opened an IRA account with payroll deductions. Edelman was the advisor, and Charles Schwab held the account.
In May 2024, Maksumova found “Sluntrades” via a direct message on TikTok from someone claiming to be an acquaintance who’d created an online course in which Maksumova previously enrolled (in reality, this was an impostor).
The fake acquaintance told her about Sluntrades, which purported to be a cryptocurrency trading platform, and Maksumova decided to invest. As part of an agreement, Maksumova would deposit funds with Sluntrades, which would supposedly invest and trade on her behalf while keeping 20% of the profit.
To invest more, Maksumova moved to liquidate the entirety of her IRA held at Schwab, and she allegedly contacted her Edelman advisor, saying “the purpose of the liquidation was for investment purposes.”
Maksumova claims that Edelman knew (or should have known) that she “was not a high-net-worth individual and had no experience with investing tens of thousands of dollars in alternative investments” and that her request should have raised red flags.
“Despite the rising prevalence of pig butchering and cryptocurrency scams, no representative ever inquired further as to why (Maksumova’s) investment required an early liquidation of her retirement account,” the complaint read. “Instead, Edelman asked for no further clarification or explanation of plaintiff’s investment purpose and only asked how much she wanted withheld for federal and state tax deductions and mentioned the penalty fee for early withdrawal.”
By June, Maksumova had withdrawn most of her funds. In July, she learned Sluntrades was a fraud when she tried to cancel portions of her original investment but instead received requests for “exorbitant funds.”
According to the complaint, she lost far more than her retirement funds, as the IRA account represented only $87,351.24 of the approximately $802,000 she lost.
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