Former chief compliance officer guilty of aiding and abetting fraud
His Northbrook, Ill.-based RIA misappropriated client assets while layering on fees
An Illinois federal court entered a final judgment against David Goulding, the former chief compliance officer of The Nutmeg Group, a Northbrook, Ill.-based RIA that the Securities and Exchange Commission charged with fraud for misappropriating client assets and misrepresenting the value of 15 investment pools.
According to the SEC’s original case, which dates back more than 10 years, Nutmeg was commingling accounts and layering on fees while investing clients in nanocap stocks.
The court found that Mr. Goulding, who has been barred from the securities industry, helped Nutmeg commingle investor funds with personal assets, misled investors about the value of their accounts, oversaw flawed internal systems and methods for valuing and reporting investments, and transferred investor money to companies controlled by his family.
The court also found that Mr. Goulding acted recklessly by taking on the compliance role despite “his complete lack of qualifications for that job.”
Mr. Goulding, 36, who is also the owner of David Goulding Inc. and David Samuel LLC, registered Nutmeg with the SEC in 2007.
According to the lawsuit, Nutmeg is owned by Randall Goulding, 58, the younger Mr. Goulding’s father, who served six months in prison for a 1992 conviction for mail fraud, tax evasion and money laundering.
Randall Goulding is also a practicing attorney licensed in Illinois.
Of the $32 million that Nutmeg managed for clients, the lawsuit say the firm misappropriated more than $4 million through a complex process of defrauding investors up until at least 2009.
“This is an incredibly complicated case, and it looks like the SEC is going after them personally now,” said Adam Gana, a securities attorney who is not involved in this case.
“It seems like these are some really bad guys,” he added.
David Goulding, who had already been charged with violating the anti-fraud provisions of the Investment Advisers Act, was ordered to pay a total of $28,935 in disgorgement and prejudgment interest.
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