A Florida-based advisory firm falsified brokerage records and investor account statements in an attempt to defraud investors, the SEC charged in a complaint filed last week.
According to the complaint, David C. Coggins, the owner of Coral Gables Asset Management, consistently misrepresented the performance of a private fund, the amount of assets managed by the firm, and Coggins’ own professional experience. The complaint alleged that Coggins provided documentation showing that the fund in question had 37 straight months of positive monthly performance, whereas in reality the fund had 26 months of negative performance.
The SEC also filed an emergency action against Coggins and Coral Gables, with a U.S. District Court judge granting their request for an asset freeze and a demand for records preservation.
"As we allege, Coggins drew in investors by suggesting that he was an experienced manager with a highly successful private fund and then took elaborate steps to conceal the truth of his fraud, including destroying evidence after being contacted by the SEC," said Kurt L. Gottschall, director of the SEC's Denver Regional Office. "The SEC's emergency action is intended to protect prospective investors from future harm by halting what we allege is an ongoing fraud and preserving the remaining evidence."
Coggins and Coral Gables were not able to be reached for comment.
Since 2015, Coggins raised more than $1.85 million from 10 investors into the private fund, and spent more than $450,000 on BMW car payments, shopping travel, meals at restaurants and divorce attorneys, according to the complaint. Since 2016, virtually everything Coggins told investors and potential investors with “materially false and misleading,” according to the SEC. The regulator argued that the behavior continued even after the SEC contacted Coggins.
“Within hours of receiving a request form the SEC to preserve documents and data, Coggins proceeded to destroy evidence from a third parties’ website that is relevant to his fraudulent conduct,” the complaint read.
Coggins and Coral Gables were charged with violating antifraud provisions of federal securities laws, and the SEC is seeking “injunctions, disgorgement of allegedly ill-gotten gains with prejudgment interest, and financial penalties against the defendants."