Massachusetts investment adviser Gregg Caplitz sentenced to prison for fraud, SEC says

Investment adviser Gregg Caplitz was sentenced to three and a half years in federal prison and ordered to pay $1.89 million to more than a dozen victims who lost retirement savings because of his fraud, according to the Securities and Exchange Commission.

Mr. Caplitz, of Wilmington, Mass., convinced clients to entrust him with their savings by falsely telling them he’d invest it when really he just took their money for his own benefit and that of his business partner, Rosalind Herman, the SEC charged in a litigation release Wednesday.

As part of the fraudulent scheme, the duo pitched a fictitious hedge fund to clients from 2008 to March 2013, the agency said in an announcement last month. Mr. Caplitz transferred his clients’ money to Ms. Herman and her sons, daughter-in-law and a company called Knew Finance Experts, according to the agency’s charges.

The Hermans used the funds for personal expenses at gas stations, drugstores and fast-food restaurants, the SEC said in its 2013 complaint. The agency froze Mr. Caplitz’s assets, along with those of Ms. Herman’s investment advisory firm, Insight Onsite Strategic Management.

Last month a Massachusetts federal jury convicted Ms. Herman of investment adviser, tax and wire fraud, as well as conspiracy. In April 2014, Mr. Caplitz pled guilty to conspiracy, investment adviser and wire fraud and making a false filing with the SEC.

The SEC said Wednesday that its litigation against Mr. Caplitz and the Hermans is ongoing.