To Philip Horn, the Braemar Country Club was not just a golf course, it was an extension of his office. Most weeks, Mr. Horn, a financial adviser at Wells Fargo, chatted up potential clients between holes at the upscale club set against the backdrop of the Santa Monica Mountains.
"I always thought, 'This is a great guy and a straight shooter,' " said Barry Zelner, one of several country club members who invested with Mr. Horn.
Now, those same clients are wondering what went wrong.
After Wells Fargo alerted him to account discrepancies, Mr. Zelner, a corporate lawyer, said he stormed onto the club's rolling greens in April, accusing the broker of theft. "Tell them what you did, Phil," the lawyer bellowed among a crowd of members.
A few months later, Mr. Horn pleaded guilty to defrauding more than a dozen clients and Wells Fargo.
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While Mr. Horn is a relatively minor player in the pantheon of financial fraud, his actions highlight the persistent problems with policing the industry, even after the wave of rules enacted since the collapse of Bernard L. Madoff's giant Ponzi scheme in 2008.
And the challenge of oversight is not becoming any easier, with the ranks of financial advisers swelling. As new regulations crimp profits, big banks like Wells Fargo are ramping up their brokerage businesses in an effort to make up for lost revenue.
Amid the renewed focus, banks have spent millions of dollars to beef up their compliance systems and improve their oversight. Regulators, too, have bolstered their efforts, increasing enforcement and adopting new measures.
Every month, the Financial Industry Regulatory Authority, a Wall Street watchdog, penalizes more than 100 brokers for various actions, including unauthorized trading and fraudulent activities, as well as smaller violations.
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"Theft, Ponzi schemes and other financial scams continue to happen at an alarming rate," said Thomas Ajamie, a plaintiff's lawyer who represents two of Mr. Horn's clients.
For more than two years, Mr. Horn systematically executed and canceled trades in clients' portfolios, pocketing the profits. To avoid detection, he limited his paper trail and made it appear that the trades originated in his own account, according to court documents.
"It's simply unbelievable to me that this kind of fraud could happen for so long without Wells Fargo doing anything about it," Mr. Zelner said. After meeting Mr. Horn on the golf course, Derek Brown invested more than $10 million with him in 2006, assured by the Wells Fargo name on his business card. "This wasn't just Schlepper & Schlepper," Mr. Brown, a retired pharmaceutical executive, said.
A Wells Fargo spokeswoman, Raschelle Burton, said the bank discovered the problems with Mr. Horn in October 2011 and immediately alerted law enforcement agencies. Wells Fargo also fired Mr. Horn. Mr. Horn is set to be sentenced on Monday. Prosecutors have recommended an 18-month sentence. A lawyer for Mr. Horn declined to comment.
Some of Mr. Horn's clients are struggling to understand the extent of their losses. Mr. Brown and Mr. Zelner say that Wells Fargo has not let them review the trading records. Instead, they have had to rely on the bank's analysis. "The firm believes it has provided appropriate information," Ms. Burton said.
Prosecutors estimate the scheme's damages at $732,000. But there are indications the losses could be higher. Last year, Wells Fargo, without explanation, transferred roughly $500,000 to an account that Mr. Brown has at Merrill Lynch. Mr. Brown said he planned to file a lawsuit seeking additional compensation.
While some clients still have concerns, Wells Fargo said the matter had been resolved and declined to provide further details. "In cases where his actions harmed the clients, the firm has either credited those accounts or reached another resolution with those clients," Ms. Burton said.
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On paper, Mr. Horn seemed like a model broker. After a short stint at Lehman Brothers in New York, he spent a decade at Citigroup in Los Angeles, moving to Wells Fargo in 2006. For much of his career, his regulatory record was clean, with few customer complaints.
At Wells Fargo, Mr. Horn, who worked in a team of brokers, seemed to land clients without an aggressive approach. He wooed clients slowly, often over many years. Between golf holes, he would casually mention winning trades, almost as an aside.
He nurtured friendships with clients. Norman Strang, an 80-year-old retired aerospace executive, said his wife regularly cooked dinner for Mr. Horn at the couple's home in Pacific Palisades, Calif. "Here he was being this friendly guy, and yet he stole several thousands of dollars from our account." Mr. Horn went to the weddings of both Mr. Brown's children and planned to join him on a charitable trip to Israel and Morocco in the fall of 2011.
In 2011, Mr. Horn invited clients to his 50th birthday party inspired by the movie "Saturday Night Fever." The tall and lanky Mr. Horn wore a white disco suit and handed out CDs with a cover that superimposed his head onto John Travolta's body.
Given Mr. Horn's gregarious nature, clients say they dismissed what should have been red flags. According to Mr. Zelner, Mr. Horn avoided meeting at his office, preferring the golf course. Between games, they would meet in the country club's parking lot, where the broker would pull trading documents from his trunk.
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"Phil would present his investments as if he was giving you something that would protect you," said Mr. Zelner, adding that "he was also just a guy you wanted to drink with."
Many clients trusted him. Each month, they received thick booklets detailing trading activity, but few pored over the trades. "If I had time to do that, I wouldn't need a broker," Mr. Brown said.
Amid hundreds of legitimate transactions, a dubious trade was also hard to spot. In one instance, Mr. Horn bought 1,000 shares of an exchange-traded fund for $77.93 apiece on February 15, 2011, according to Mr. Brown's bank statements. A month later, Mr. Horn canceled the trade. By then, the price had surged to $86. But the transaction was buried within more than 50 double-sided pages. It appeared as a canceled trade, which by itself was not alarming.
Mr. Brown and his wife did not know anything was amiss until they received a startling call from an executive at Wells Fargo. While the couple were celebrating the Jewish holidays in Toronto in October 2011, the bank executive told them about the problems with their account. Mr. Brown added, "He said we had a 'six-figure problem.' "