Kaplan Twins Accused of Client Fraud

Federal investigators allege Adam and Daniel Kaplan, former advisers at Morgan Stanley, Merrill Lynch and IHT Wealth Management, engaged in unauthorized client transactions. The SEC complaint cites altered checks, $156,000 in wires to high-end retailers—including $58,000 for a watch, $30,000 for a matchmaking service and $68,000 for accessories—and the diversion of roughly $500,000 in excess fees and $4.5 million from client accounts, for a total of about $5.2 million.

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The twins first entered public view when their father, allergist Stewart Kaplan, sued the University of Rochester for denying summa cum laude honors despite near-perfect GPAs; the university later corrected the diplomas. After graduating, they joined Morgan Stanley in 2016, later moving to Merrill Lynch and IHT Wealth Management, where they built a client base that included many elderly and infirm individuals. Federal investigators, the SEC, and a federal court have since become central to the ensuing legal disputes, while the twins’ defense counsel argues that repayment nullifies the alleged misconduct.

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The SEC called the conduct unauthorized and deceptive, seeking civil penalties and restitution. A federal court dismissed a client-initiated fraud suit, granting the twins a $245 judgment. Their defense counsel argued that repayment would render the misuse immaterial, suggesting the funds could have covered ordinary expenses.

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Clients and consumer-advocacy groups condemn the brothers for exploiting vulnerable individuals and for falsely claiming Harvard MBAs while only completing extension-program courses. The SEC investigation underscores broader fiduciary concerns in private-wealth advisory services.

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• “Client F wrote four checks payable to Daniel Kaplan, which Daniel was to use for home repair projects for Client F’s elderly mother,” reads the SEC complaint; Daniel allegedly “changed the amounts written on the checks and kept the proceeds.” — SEC Complaint, March 2023

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• “did with the money. They could use it to pay expenses. They could use it to fix their roof. They could use it to buy handbags.” — Defense attorney, trial testimony

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• “ The Kaplans had claimed to at least one client they got their MBAs from Harvard, according to federal investigators; they in fact took some classes at the extension program.” — Federal investigators, SEC filing

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The SEC continues to pursue civil enforcement, including potential disgorgement and penalties. Additional client complaints may be examined, and regulatory scrutiny of private-wealth advisors is expected to intensify.

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