SEC files fraud charges against two advisers for allegedly falsifying credentials
As the regulator announced the cases, it issued an investor alert urging the public to condduct background checks on advisers.
The Securities and Exchange Commission filed two cases Wednesday against purported investment advisers who falsified their credentials. In a related investor alert, the regulator warned of such misrepresentation and suggested the public do background checks on those helping them manage their money.
In one case, the SEC charged that Todd M. Schoenberger of Lewes, Del., solicited at least a dozen people to invest in promissory notes issued by LandColt Capital, an unregistered advisory firm. According to the SEC, he said the notes would be repaid from management fees earned by a private fund he would launch.
Mr. Schoenberger, flaunting his appearances on national cable television business programs, persuaded four people to invest $130,000. But he never launched the private fund and never paid back the investors, instead diverting $67,000 for personal use, according to the SEC.
Mr. Schoenberger settled with the SEC, paying a $65,000 disgorgement and $4,349.87 in prejudgment interest. He also was barred from the securities industry.
In the other case, the SEC charged Michael G. Thomas of Oil City, Pa., with misrepresenting to investors his background, past investment performance and projected returns from Michael G. Investments. He told potential investors that he was named a Top 25 Rising Business Star by Fortune magazine, according to the SEC. Mr. Thomas did not receive that honor because it does not exist.
He reached a $25,000 settlement with the SEC and agreed to a five-year ban from the industry.
The SEC said it is cracking down on people posing as investment professionals, or who exaggerate or lie about their credentials. The regulator issued an investor alert urging the public to check the background of advisers.
“Advisers looking to raise funds cannot lie about their backgrounds to lull investors into a false sense of security about their purported expertise or the profitability of a potential investment,” Julie M. Riewe, co-chief of the SEC Enforcement Division’s Asset Management Unit, said in a statement. “Each adviser in these cases used false claims about his background to create trustworthiness and lend credibility to their offering schemes.”
Attorneys for Mr. Schoenberger and Mr. Thomas declined to comment.
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