The US Securities and Exchange Commission has brought investment adviser against Jeremy Joseph Drake. He is accused of bilking a known professional athlete and his wife, making about $900K in compensation in the process. At the time of the purported financial fraud, Drake worked with HCR Wealth Advisers.
According to the regulator’s complaint, the couple entrusted over $35M of their assets to Drake to manage. As their investment adviser, he owed them a judiciary obligation.
The investment adviser fraud allegedly went on for over three years, during which time he allegedly told the couple that they were receiving a .15 to .20% fee rate on assets under management when they were actually paying a 1% fee. As a result, the athlete and his wife ended up paying $1.2M more in management fees than what they were told they had paid.
Drake is accused of hiding the fraud by drawing up fake documents and pretending to be someone else. He also allegedly lied to the couple by sending them emails and reports that were misleading, as well as documents he’d fabricated.
When the athlete’s wife demanded that he account for the fees, Drake allegedly pretended to be someone named Ron Stenson, who went on to corroborate what the investment adviser had told them. Stenson supposedly worked with Charles Schwab Advisor Services. Drake allegedly made up documents with a logo that had that company’s name and set up an email address for Stenson.
Drake eventually admitted to the athlete’s wife that he had lied and he cautioned that reporting his actions could lead to bad publicity for her husband. Now, the SEC is charging Drake with fraud. The Commission claims that Drake knew what he was doing when he was bilking the clients and he did not exercise reasonable care when he gave them “materially false information” regarding their management fees and engaged in the other misconduct alleged. The regulator wants a permanent injunction, the restoration of ill-gotten gains, interest, and penalties.
Drake, who was fired by HCR Wealth Advisors in 2016, managed over $50M in AUM for over 20 clients. According to the SEC’s complaint, a significant amount of the compensation that Drake was paid at HCR were from fees that the firm charged clients for these assets that he managed.
Drake is still associated with another investment adviser that is registered in California.
SEC Obtains Final Judgment in Pro Athlete Investment Fraud Case Involving Pennsylvania Financial Adviser
The SEC recently announced that it had received a final judgment in its investment fraud case against Louis Martin Blazer, who is accused of bilking several pro athletes. The Pennsylvania financial adviser allegedly took money from clients’ accounts to invest in movie projects. He also is accused of making Ponzi-like payments.
Now, Blazer must pay about $1.8M in disgorgement plus prejudgment interest, as well as a civil monetary payment of $150K.
Investment Adviser Fraud
Our securities fraud law firm represents professional athletes and their families, as well as other investors that have sustained investment losses due to investment adviser fraud. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.