Conn. Advisor Rafal Pleads Guilty to SEC Obstruction

John William Rafal, 66, a former Connecticut financial advisor, has agreed to plead guilty to obstructing a Securities and Exchange Commission (SEC) investigation by concealing secret referral payments made to a lawyer to secure a high-net-worth client. The deal, brokered in 2011, involved a $50,000 kickback from Rafal’s financial services firm — a payment that violated federal and state securities regulations.

After Rafal’s company discovered the illicit arrangement, it halted the payments and ordered Rafal to retrieve the funds. But unbeknownst to executives, Rafal bypassed company controls, writing personal checks from private accounts to funnel the full $50,000 to the attorney anyway. The move bypassed oversight and buried the transaction outside official records.

In May 2015, during a sworn SEC examination, Rafal lied under oath, repeatedly describing the referral deal as “cured,” “reversed,” “undone,” or “fixed.” He failed to disclose a single detail about the personal checks, directly misleading federal investigators. His testimony was crafted to shield the illegal payments and protect his role in the scheme.

Charged with obstruction of an SEC investigation, Rafal faces a maximum of five years in prison, three years of supervised release, and a $250,000 fine. But if the plea agreement is accepted by U.S. District Court Judge Nathaniel M. Gorton, Rafal will serve four months of home confinement, followed by four months of probation, and pay a $4,000 fine. Sentencing is scheduled for January 20, 2017.

The case also triggered parallel action by the SEC. Rafal has agreed to a lifetime bar from the securities industry and will disgorge and pay over $500,000 in penalties and ill-gotten gains. The sanction severs his ability to ever work in finance again, marking a total professional collapse.

“Today’s charge underscores our determination to investigate and prosecute those who impede SEC examinations and enforcement,” said United States Attorney Carmen M. Ortiz. SEC Inspector General Carl Hoecker echoed the sentiment, praising the joint effort that exposed Rafal’s deception. The case was prosecuted by Assistant U.S. Attorney Brian Pérez-Daple of Ortiz’s Economic Crimes Unit.