SEC alleges Florida operator faked fund returns targeting police retirees

The SEC filed a complaint accusing a West Palm Beach operator of raising roughly $750,000 through two sham funds, then faking returns with a practice trading account. 

According to the filing, the operator and his entity CMI Capital, LLC - doing business as Check Mate Investments - solicited investments in two purported pooled funds beginning around January 2024. Neither fund was ever incorporated, the SEC alleges. 

The operator built trust through his job at a police and firefighter pension plan administration company in West Palm Beach, the complaint says. At least 30 people invested. Several were current and retired law enforcement members. 

The funds were pitched as options-trading vehicles with eye-popping track records. In investor letters sent in January, April, and May 2024, the defendants claimed the strategy had in the past five years "provided year over year performance of 187% with 2023 being 331% returns," the complaint states. The SEC alleges the operator never opened any brokerage accounts for the entity and that his own prior trading had produced years of losses. 

The complaint describes an elaborate performance. The operator allegedly posted "highly cropped screenshots of fake returns he had made on a practice trading platform" to a Facebook group chat, passing them off as real trades. On one occasion in April 2024, he told the group that Fund 1 was "$40,000 away from reaching a million-dollar portfolio value" while posting GIFs from The Wolf of Wall Street, according to the filing. 

By August 2024, an investor report claimed a 141.08% return since inception and a portfolio value of $5,062,702. The SEC says none of it was real. The trading strategy "was unprofitable every month of trading during the Relevant Period," the complaint states. Actual trading produced "aggregate trading losses of at least $428,000." 

The SEC further alleges the operator "misappropriated" at least $228,000 for personal expenses - rent, restaurant bills, ATM withdrawals, and Cash App transfers. 

The operation fell apart around August 2024 when investors caught on, the filing says. Defendants returned at least $375,000 that month. 

The SEC charges violations of Securities Act Section 17(a), Exchange Act Sections 10(b) and 15(a), Advisers Act Sections 206(1), 206(2), and 206(4), and Investment Company Act Section 7(a), and seeks injunctions, disgorgement, civil penalties, and conduct bars.