The Securities and Exchange Commission announced two separate fraud cases Wednesday against financial advisors who allegedly made false claims to gain investors’ trust.
The announcement came with an alert from the SEC’s Office of Investor Education and Advocacy warning investors of fraudulent advisors faking a reputation of success and accomplishment.
The SEC alleged that Michael Thomas of Oil City, Pa., sent marketing materials that exaggerated his past investment performance, inflated his fund’s projected performance and misrepresented industry professionals who would co-manage and advise the fund. He also said that Fortune Magazine named him a “Top 25 Rising Business Star,” a list that doesn’t actually exist at the magazine.
Thomas agreed to pay a $25,000 penalty, is barred from associating with any broker, dealer, or investment advisor for at least five years, and agreed to not participate in the issuance, offer or sale of certain securities for five years.
After an unrelated investigation, the SEC accused Todd Schoenberger of Lewes, Del., for misrepresenting his college degree and appearances on cable news programs while soliciting investors with promissory notes from an unregistered investment advisory firm. The SEC said Schoeberger told investors that his firm, LandColt Capital, would repay through fees earned from managing a private fund that he never actually launched and never paid the promised returns.
Schoenberger also agreed to pay $65,000 in disgorgement of ill-gotten gains, and is also barred from associating with any broker, dealer or investment advisor. He was also barred from serving as an officer or director of a public company.
“Do not trust someone with your investment money just because he or she claims to have impressive credentials or experience, or manages to create a ‘buzz of success,’” the SEC’s alert said.