Multimillion-Dollar Investment Adviser Fraud Cases Target Widows, Older Investors, and Other Retail Investors
Two Investment Advisers Accused of $20M Investor Scam
The US Securities and Exchange Commission has filed civil charges against investment advisors Ronald A. Fossum and Alonzo Cahoon. They are accused defrauding retail investors in an unregistered securities scam. According to the regulator, from about 3/2011 to 6/2016, Fossum raised over $20M from more than 100 investors via securities offerings in investment funds under his control or ownership, including the:
- Accelerated Asset Group, LLC
- Turnkey Investment Fund, LLC
- Smart Money Secured Income Fund, LLC
Fossum is accused of misappropriated hundreds of thousands of dollars of investors’ money to pay his own expenses, including living in a home owned by one of the fund’s free of rent. He also allegedly used investor funds to pay for international travel and federal taxes.
The SEC said that Fossum continued to get more investors by not disclosing that one of the funds, the Smart Money Secured Income Found, was in poor financial health. He also is accused of commingling the funds’ assets to meet liquidity needs.
The two men are accused of selling unregistered securities and acting as unregistered brokers while earning compensation from the sales. For example, they allegedly misrepresented to investors that they would only have to pay a $2,990 management fee one time for every investment unit sold when, in reality, the two investment advisers took $20K more from every investment as compensation.
$9M Ponzi Scam Allegedly Targeted Older Investors
Stephen C. Peters and his investment adviser firm VisionQuest Wealth Management allegedly ran a Ponzi fraud whose victims were mainly his clients. Many of them were older investors and retired.
According to the SEC, the investment adviser and his firm sold promissory notes from another company that Peters owned, VisionQuest Capital, to his clients and prospective investors. The two of them allegedly made false statements about how the proceeds would be used and claimed that neither Peters nor his business would be paid compensation. Peters also is said to have touted that the investments were guaranteed and came with little or no risk.
Now, the Commission is contending that at least $4.4M in funds were used for remodeling a farm, buying fine art, and building a vacation home in Costa Rica. Another $4.9M was allegedly used to make Ponzi payments to investors. The regulator wants disgorgement, interest, injunctions, and penalties.
Prosecutors in North Carolina have filed criminal charges against Peters over the alleged elder financial scam.
Financial Advisor Who Targeted Widows Gets Decade-Long Prison Term
Peter Martorana, a financial adviser who had an office in New Jersey residential retirement community, has been sentenced to 10 years in prison. Martorana, who pleaded guilty to fraud, is an investment adviser accused of targeting senior citizens, most of them widows. He bilked them of more than $1M.3.
According to prosecutors, between 12/2006 and 7/2013, Martorana got different elderly victims to write checks to him and his Retirement Benefit Specialist company while misrepresenting to them that he would invest their funds. None of that money went toward investments.
Our elder financial fraud lawyers at Shepherd Smith Edwards and Kantas, LTD LLP represent older investors and retirees. We also represent other retail investors. Contact our investor fraud law firm today.
The SEC Complaint and the Fossum and Cahoon Case (PDF)
The SEC Complaint in the Alleged VisionQuest Wealth Management Ponzi Scam (PDF)
Financial adviser gets 10 years for scamming $1.3M from elderly in Holiday City, USA Today Network, December 8, 2017
More Blog Posts:
UBS Did Not Fully Disclose the Risks Involved in Puerto Rico Bond Funds to Investors and Brokers, Reports CNBC, Stockbroker Fraud Blog, December 22, 2017
Ameriprise Ordered to Pay $8M Over F-Squared Alpha Sector Strategy Sales, Institutional Investor Securities Blog, November 8, 2017
SEC Orders 235 LLCs to Produce Documents Related to Its Woodbridge Fraud Probe, Stockbroker Fraud Blog, November 5, 2017