Former investment adviser pleads guilty in $3 million fraud

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PHOENIX (3TV/CBS 5) -

Richard Mark Schmerman, 58, pleaded guilty to stealing more than $3 million in client funds. He faced two charges of theft and two counts of fraudulent schemes and artifices.

Schmerman was a registered securities salesman and investment adviser representative operative under Diversified Financial in Arizona.

[RELATED: Arizona grand jury indicts ex-investment adviser for fraud]

Schmerman, who was indicted by a grand jury in March, used his clients' investment funds to pay personal expenses. One expense was a single payment of more than $400,000 to a civil judgment issued against him.

Investigators said Schmerman impersonated some of his clients to gain access to their investment accounts.

Under the plea agreement, Schmerman will face a mandatory prison sentence of five years and then supervised probation for up to seven years. The plea will require Schmerman to pay more than $3 million in restitution to his victims.

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