The SEC is charging Miami investment adviser Phil Donnahue Williamson with running a Ponzi scam and bilking at least seventeen investors. The U.S. Attorney’s Office for the Southern District of Florida has filed a parallel criminal action against him.
According to the SEC, Williamson raised over $2 million over the course of seven years-from ’07 to ’14-while making misrepresentations about the way investors’ money would be used, as well as regarding the investments’ valuations and returns. He also allegedly misused or misappropriated at least $748,000 of client money to pay for personal expenses, other businesses, and unrelated investment activities. Among his investors were several retired local law enforcement officers and teachers who were looking to put their savings in safe investments.
Williamson allegedly used the money he solicited for the Sterling Investment Fund, which supposedly invested in properties and mortgages in Georgia and Florida, to run his Ponzi scheme. He advised investors to buy an LLC interest in the fund.
The Sterling Fund’s subscription agreement stated that the minimum agreement was $25,000 and that the funds would go toward buying mortgage loans or institutional third-party financing, which was to be used to also buy mortgage loans and otherwise support the business of the company.
These investors authorized Williamson to rollover their retirement accounts and buy interest in the Sterling fund. They gave him, as their financial adviser, total control over their accounts. They didn’t realize that they also were authorizing Williamson to deduct advisory fees for his services.
The regulator claims that Williamson told investors that there would be zero risk to their money if they invested and annual returns were supposed to range from 8 to 12%. However, instead of investing their funds, the Miami investment adviser allegedly took most of it to cover his personal spending and pay other investors their supposed returns. He then sent them bogus valuations.
The SEC complaint states that the same day one retired schoolteacher and church pastor invested $125K, Williamson transferred $10,000 to himself to pay his expenses. He paid other investors $24,400 in “distributions” while moving another $24,000 to cover more of his personal spending.
Investors eventually became suspicious about their diminishing returns and wondered why Williamson, when questioned, could not come up with a list of properties that the Sterling Fund was supposedly backing. Some also started to get worried after they asked Williamson for an early distribution and discovered that their money was not so easily accessible as promised
To resolve the SEC charges, Williamson has consented to be liable for more than $748,000 in disgorgement.
Our Ponzi scam lawyers are here to help investors get their money back. We also have worked with retirees and other older investors who’ve seen their life savings dwindle because of fraud or the negligence of supposed investment professionals. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.
Madoff Ponzi Scam Victims Recover Over $10 Billion, Institutional Investor Securities Blog, December 5, 2014