A Long Island-based RIA and two of its principals have been hit with civil and criminal charges after allegedly defrauding clients into putting more than a hundred million dollars into conflicted private fund investments – while telling those clients their money was safe.
In a civil complaint filed April 3 in the US District Court for the Eastern District of New York, the Securities and Exchange Commission alleges A.G. Morgan Financial Advisors, along with its sole owner and CEO Vincent J. Camarda and president James E. McArthur, raised at least $138 million from at least 431 investors.
They solicited those investments between approximately June 2020 and December 2023, through a series of promissory notes issued by five private equity funds that Camarda and McArthur created, managed and owned, according to the SEC.
Many of the investors tapped by A.G. Morgan – which was charged previously by the SEC in 2022 in connection with another unregistered $500 million fraudulent offering, and ordered to pay at least $7 million in a FINRA arbitration late last year – were existing advisory clients, including retirees and people approaching retirement.
According to the SEC's latest complaint, Camarda and McArthur told clients the funds were "conservative and safe investments that would generate monthly distributions at an annualized interest rate of 9% or 11%." Offering documents described diversified investment strategies spanning mining, real estate, merchant cash advances and financial planning firms.
But in practice, four of the funds invested entirely in a single mining company – Millennium Holdings – and the fifth invested exclusively in Buzz'd Express Coffee Enterprises, a drive-thru coffee shop in North Bellmore, New York, owned by Camarda's son. The complaint alleges Camarda and McArthur formed the fifth fund, the Wilshire Capital Fund, for the sole purpose of backing his son's business.
The funds used interest received from those underlying ventures to make the 9% or 11% payments back to investors. In the case of the mining-linked funds, the complaint describes a hidden spread: Millennium was paying the funds 17% interest, while investors received only 9% or 11% – with Camarda and McArthur allegedly pocketing the difference. Camarda reportedly took 90% of that spread, while McArthur kept the remaining 10%. Together, the complaint says, the two collected at least $2.97 million through that arrangement – none of which was disclosed to clients.
The filing also describes a pattern of investors being steered away from the written risk warnings in offering documents. In some cases, clients said they never read the risk language because the adviser told them the investment was safe and they trusted him. In others, clients were sent signature pages without any accompanying offering memorandum at all. When investors raised questions about risk disclosures, Camarda allegedly told them not to worry about it.
By April 2023, Camarda reportedly knew Millennium was having trouble meeting its payment obligations. Rather than alerting clients, the complaint alleges he continued recommending the funds as safe and conservative – and simultaneously began diverting incoming investor money to his own bank account.
On at least 14 occasions between April and December 2023, he allegedly transferred offering proceeds directly to himself instead of investing them. In one instance, a client wired $770,000 into the Omni Diversified Fund; within two days, $400,000 of it was reportedly moved to Camarda's personal account. In total, the complaint says Camarda misappropriated at least $1,028,500 in client money that year.
In January 2024, Millennium stopped making payments, the funds stopped paying investors, and the scheme collapsed. Investors collectively lost approximately $123 million in unreturned principal.
On the same day the civil complaint was filed, Camarda appeared in federal court in Central Islip and pleaded guilty to securities fraud and investment adviser fraud, according to the US Attorney's Office for the Eastern District of New York. Under that parallel criminal case, the 62-year-old faces a maximum sentence of 20 years in prison, restitution of at least $160,022,836.81 and forfeiture of $6,639,498.17.
US Attorney Joseph Nocella said in a statement that Camarda "used a series of lies to lure clients, including elderly and other vulnerable individuals, into investing with him." The FBI, whose New York field office worked the case alongside the SEC, said he "repeatedly deceived trusting clients to steal hundreds of thousands of dollars to finance extravagant purchases."
According to the US Attorney, at least some of the money was used to pay for "personal expenses and luxury items, including plastic surgery, travel, jewelry and luxury goods."
On the civil side, the SEC is seeking permanent injunctions, disgorgement with prejudgment interest and civil penalties. It is also asking the court to permanently bar both Camarda and McArthur from acting as or associating with any broker, dealer or investment adviser. None of the civil allegations against McArthur or A.G. Morgan Financial Advisors have been proven in court.
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