‘Biblically-Based’ Financial Firm Ordered to Pay Civil Penalties

By Kim Roberts
ambassador advisors bernie bostwick
Ambassador Advisors president Bernie Bostwick speaks at a company event in December 2019 in Spring Garden Township, Pennsylvania. (Photo via Facebook)

A federal court has ordered Ambassador Advisors, a “biblically-based” financial advisory firm, to pay over $2 million in fines for failing to act in the best interests of its clients and instead enriching itself.

U.S. District Judge for the Eastern District of Pennsylvania John Gallagher ordered Ambassador—based in Lancaster, Pennsylvania—and its principals to pay civil penalties, pre-judgment interest, and disgorgement. Disgorgement refers to the repayment of “ill-gotten gains.”

The firm also was required to remove misleading statements from its website, which it has done, and to send clarifying notices to its clients.

The firm published a statement online, stating it “vehemently disagrees” with and is “extremely disappointed” in the court’s decision. Ambassador added it will focus all its “time and attention on serving our clients in this time of market turmoil.”

Founded by Robert Kauffman in 1990, Ambassador Advisors says its mission is “[t]o support and promote Biblical stewardship through appropriate financial planning, estate strategies, and money management services for the benefit of nonprofits, charities, individual donors, and investors.”

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It claims to have a passion for being a “conduit for Kingdom work throughout the world.”

One of the firm’s values is “to act and communicate with credibility, truth, and trust in all business interactions; we demonstrate a repentant attitude if we fail and a forgiving attitude if others do.”

In May 2020, the U.S. Securities and Exchange Commission (SEC) filed a civil action against the firm and its principals, Bernard Bostick, Robert Kauffman, and Adrian Young, for “unlawfully invest[ing] their advisory clients in mutual fund share classes with 12b-1 fees when lower-cost mutual fund share classes were available to the clients” from August 2014 through December 2018.

During the period in question, Ambassador Advisors handled between $270.6 million and $489.6 million in assets for 2,600 to 4,300 clients, most of which were individuals.

These 12b-1 fees, which take their name from the SEC regulation governing them, are paid out of mutual funds to cover the costs of distribution and shareholder services.

ambassador advisors
Logo for Ambassadors Advisors (Courtesy Image)

Bostick, Kauffman, and Young “enriched themselves” from the 12b-1 fees being charged, according to the court filings, rather than revealing to clients that lower cost funds presented “a more favorable value.”

Ambassador’s own handbook required it act in the fiduciary interest of its clients and “must at all times … [p]lace the interests of Advisory Clients first.”

The SEC complaint asserted that Ambassador failed in its fiduciary duty to disclose the conflicts of interest “fully and fairly” to its clients, so they could give “informed consent to the conflicts.”

In its answer to the SEC’s complaint, Ambassador claimed that it did provide “sufficiently specific facts” to reveal any conflict of interest. The firm added that even if it had provided the facts the SEC claimed were required, the addition would have had no real impact.

Ambassador also claimed that the SEC did not provide sufficient notice of its disclosure requirements so that Ambassador could comply with them. Furthermore, it alleged that the SEC did not follow proper rule-making procedures under the Administrative Procedures Act.

In March 2022, a jury found Ambassador Advisors and its principals liable for breaching its fiduciary duties to their clients.

In his final opinion on September 7, U.S. District Judge John Gallagher noted that Ambassador had received at least three notices from its compliance consultant informing it that the SEC was enforcing actions against other firms with similar practices.

Gallagher, in evaluating Ambassador’s actions wrote about it “obstructing the SEC’s discovery efforts and responding to client questions about fees with less than transparent answers.”

“Defendants have also failed to acknowledge the wrongful nature of their conduct. Shortly after the jury returned its verdict in this case, Defendants released a video and statement declaring that their “clients were never overcharged, nor were gains or returns compromised in any way,” he continued.

The video is no longer available for public viewing.

Gallagher did not issue a permanent injunction against Ambassador Advisors because it is no longer purchasing 12b-1 based mutual funds and has a “generally positive regulatory history.”

“We move confidently into the future, expressing our grateful thanks to the overwhelming support from our clients and the community through these many months,” Ambassador stated online.

Kim Roberts is a freelance writer who holds a Juris Doctor from Baylor University. She has homeschooled her three children and is happily married to her husband of 25 years.

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8 thoughts on “‘Biblically-Based’ Financial Firm Ordered to Pay Civil Penalties”

  1. Assuming the facts are as stated this would seem to be an obvious money grab as this firm would be well aware of the share classes and the associated fees. Sad to say but I have often felt that the term Christian businessman is an oxymoron. The more money and power that is involved the more rationalization of bad behavior there seems to be.

    1. Bill, I understand your concern about those who abuse money and power. But will you please give consideration to the fact that there are millions of Christian businessmen and businesswomen throughout the world who serve Christ and communities by providing goods and services, paying taxes, creating employment opportunities, and giving back to their communities.

  2. Automatic red flags: 1) let me tell you how godly I am and here is my resume of endless godliness I’ve done since forever. 2) let me tell you how God is using me to help Christians be financially sound and just believe me, after all I go to church and I’m an elder and all the parishioners will tell you how I am a godly man/woman. Class dismissed

  3. Yup – using religion for grift (money), power and control (Republi-cons) and sex…. just how new is that…for the faithful are the gullible…and Jesus’ name is the best….😥

  4. They are indeed Biblically-Based, in that the Bible does identify their basis, as it does the Popes and the Apostle from whom their Apostolic Succession comes (no, not Peter, but the one referred to in John 17:12, compare 2 Thessalonians 2:3).

  5. It never ceases to amaze me, throughout the years …….. how these “Christian financial” outfits bait people into worshiping money.
    No one is going to convince me in any way that a “mutual fund” is a biblical way to invest money …… NO way.
    God looks-out for the sparrows, yet you need a “mutual fund”?? ………… That’s hilarious.
    You want to “invest” in something?? ………… Invest in the Hood Project in Chicago ……. or in one of these outfits that works to stop mad doctors from cutting body parts off of kids on less than flimsy bases.

  6. Jim, I agree. How this demonic event has occurred where parents and adults and teachers think letting a child decide its sexuality and letting kids destroy their bodies is so beyond my understanding. It’s truly a demonic force that has overtaken our communities and we seem to just watch. Fight back and this same demonic force will attack with no mercy. Why our churches and schools (with the good teachers) are not screaming to high heaven is confusing. And yes, men can have babies. Ya knows how??? Step 1) Be a woman who identifies yourself as a man step 2) don’t remove the girlie parts then get pregnant and say, “see a man can get pregnant”. And yes, people are saying that and actually mean it. Our newest member of the SCOTUS says she can’t actually say what a woman is. 20 years ago, this would be unheard of. The democrats use it, and the GOP just blithely stands by while it happens. Demonic and scary.

  7. Granted that Warren Buffett’s interest in birth control is way over the top, He does have some good advice on some things❗

    ‘Buffett has written several times of his belief that, in a market economy, the rich earn outsized rewards for their talents. His children will not inherit a significant proportion of his wealth. He once commented, “I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing”.’

    https://en.m.wikipedia.org/wiki/Warren_Buffett

    If you’re going to invest you should do it on your own. Mr. Buffett sets a better example on how to invest than most televangelists or leaders of mega churches do!

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