The Securities and Exchange Commission has filed charges against Fredrick D. Scott, the New York money manager who owns investment advisory firm ACI Capital Group. The regulator contends that he falsely claimed that the company’s assets under management were as high as $3.7 billion to give him greater credibility when he promoted investment opportunities that were too good to be true. Scott allegedly ran a number of financial scams that targeted small businesses and individual investors.
The SEC says that Scott solicited investors for money by promising high return rates and then stole their funds the moment they deposited it with his investment advisory firm. He used their money to pay for personal expenses and investors never received returns.
One securities scam Scott purportedly perpetuated was what is referred to as an advance fee scheme. Investors were promised that ACI would give multimillion-dollar loans to people wanting bank financing. However, they first had to advance a percentage of the loan figure to the investment advisory firm. Afterwards, they were to get the remaining balance that was promised to them. Unfortunately, investors never received this money.
Another fraud that Scott allegedly perpetuated involved giving investors a chance to issue a bridge loan to a third party entity. They had to pay for part of the loan and then ACI was supposed to cover the balance. In return, the investor would get back a significant return on the investment. Again, these investors never got the returns promised to them and Scott took their money.
Scott has already pleaded guilty to criminal charges over these securities fraud allegations, including making false statements to SEC examiners, lying to SEC staff who were examining ACC Capital Group, and engaging in a wire fraud scheme to bilk investors of more than $1 million. He faces up to 20 years in prison for the fraud and five years over the making false statements charge. He also must pay $1,338,700 million to his victims and forfeit assets.
SEC Charges Owner of ACI Capital Group with Defrauding Investors While Grossly Exaggerating the Amount of Assets Under His Management, Businessweek, September 16, 2013
Chief Executive Officer of ACI Capital Group Pleads Guilty, FBI, September 13, 2013
More Blog Posts:
Securities Headlines: UBS to Pay $4.5M Over Unregistered Assistants, $6M Ponzi Scam Allegedly Funded Reality Show, & Cherry Picking Allegations Lead to SEC Charges, Stockbroker Fraud Blog, August 30, 2013
Texas Money Manager Sued by SEC and CFTC Over Alleged Forex Trading Scam, Stockbroker Fraud Blog, August 6, 2013
JPMorgan Found Liable in Billionaire’s Subprime Mortgage Lawsuit for Over $50M in Damages, Institutional Investor Securities Blog, August 28, 2013