Avon Financial Adviser Indicted on Federal Fraud Charges in $3.3M 'Free-Riding' Scheme

An Avon investment adviser who previously founded a financial planning firm focused on autism services faces federal fraud charges in connection with an alleged scheme that cost three financial services companies more than $3.3 million, according to federal prosecutors.

A federal grand jury in New Haven returned an 11-count indictment on Feb. 4 charging Andrew M. Komarow, 36, with wire fraud and securities fraud, according to authorities. Komarow appeared Monday before U.S. Magistrate Judge S. Dave Vatti in Bridgeport and pleaded not guilty to all charges. He was released on a $50,000 bond.

Prosecutors allege Komarow exploited the timing lag in Automated Clearing House transfers to gain access to credit he was not authorized to use. The practice, known as “free-riding,” involves exploiting the window between when a broker-dealer extends immediate access to deposited funds and when the underlying bank transfer actually clears, according to the indictment.

Between October 2022 and February 2023, Komarow allegedly initiated approximately $8.9 million in transfers from bank accounts with insufficient funds into multiple brokerage accounts, authorities said. He then used those accounts to conduct high-risk, short-term options trading before the transactions cleared, according to prosecutors.

The indictment charges Komarow with 10 counts of wire fraud and one count of securities fraud. Each count carries a maximum prison term of 20 years, according to federal sentencing guidelines.

The criminal charges stem from earlier regulatory actions against Komarow. The U.S. Securities and Exchange Commission filed a civil complaint against him in December 2023, alleging he traded $6.9 million in funds he did not have, according to court records. A federal judge subsequently granted a consent judgment barring him from acting as a broker or investment adviser.

The Certified Financial Planner Board of Standards separately barred him from holding a CFP certification, according to regulatory records.

Komarow had previously founded Planning Across the Spectrum, a Farmington-based firm that specialized in financial planning for individuals with autism spectrum disorder and their families, according to business records. The firm’s website is no longer active.

The alleged scheme highlights the vulnerabilities in electronic fund transfer systems that can be exploited by bad actors in the financial services industry. Free-riding schemes take advantage of the settlement periods built into the banking system, allowing individuals to temporarily access funds that don’t actually exist in their accounts.

The case represents one of the larger financial fraud prosecutions in Connecticut’s federal court system in recent months, with the alleged losses exceeding $3 million across multiple financial services companies.

The FBI conducted the investigation into Komarow’s alleged activities, according to federal prosecutors. Assistant U.S. Attorney Christopher W. Schmeisser is prosecuting the case for the government.

The charges against Komarow underscore ongoing federal efforts to crack down on securities fraud and protect the integrity of financial markets. Wire fraud and securities fraud are among the most serious white-collar crimes prosecuted at the federal level, often resulting in significant prison sentences for those convicted.

Komarow’s case will proceed through the federal court system, where he will have the opportunity to present his defense against the charges. The timing of his trial has not yet been announced by the court.

The investigation and prosecution demonstrate the collaborative efforts between federal agencies and regulators to identify and pursue financial crimes that harm both individual investors and the broader financial system.