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US SEC building in Washington, D.C., 2008 Chip Somodevilla/Getty Images
US SEC building in Washington, D.C., 2008

SEC Freezes Assets of Unregistered California Broker

Justin Robert King was offering interests in his company, Elevate Investment Fund, when there was no such legal entity, leading to nearly $4 million in investor losses, according to SEC allegations.

The SEC obtained emergency relief to freeze the assets of a California-based broker and his company, alleging that he was running an ongoing investment fraud that led to nearly $4 million in investor losses.

In a complaint filed in December and unsealed on Jan. 7, the commission argued that Justin Robert King of San Juan Capistrano, Calif., touted that his company Elevate Investment Fund could provide a 61% return, as well as a return of more than $600,000 on a $1 million investment. King launched the offering in June 2019, raising at least $7.4 million in investor funds at that time. Elevate’s website named King as its founder and president, and stated that “Elevate Investment Fund, LLC” was a “master fund” domiciled in the state of Wyoming.

“In fact, there is no legal entity with the name ‘Elevate Investment Fund’ formed under the laws of Wyoming or any other state,” the complaint read. “Instead, Elevate and King are depositing money raised from investors into brokerage and bank accounts controlled by King that are in the name of King, Elevate, or S. King,” with the latter name referring to King’s wife, Shannon. 

According to the complaint, King made several false statements to clients, including the promise of returns. While King and Elevate managed five brokerage accounts between June 2019 and June 2020, that trading led to losses in each account that combined to more than $3.8 million. The Elevate website also pointed to King’s supposed skills in boosting client profits, touting him as “one of the most successful traders in the industry.” But in the brokerage accounts he’s managed since 2016, the losses have been consistent, according to the SEC.

King did not return requests for comment by press time.

According to Elevate Investment’s website, the company claimed to be affiliated with providers, including TD Ameritrade, Charles Schwab, Interactive Brokers and NinjaTrader. But TD Ameritrade closed Elevate and King’s accounts last summer, and while Interactive Brokers had received account applications from King, it hadn’t approved any openings yet, according to the SEC. The complaint said NinjaTrader didn’t have any record of a business relationship with King or his company.

With all of the investor funds being deposited into brokerage accounts under King and Elevate, King transferred $1.2 million from the brokerage accounts into bank accounts affiliated with him and his wife, according to the complaint. As this went on, King continued to solicit investors, raising $1.87 million between September and November 2020 alone, with King and Elevate suffering $532,232 in trading losses. Despite these losses, King allegedly transferred $298,000 into bank accounts under his wife’s name and an additional $100,000 to his wife’s bank account on Dec. 1, 2020, according to the SEC.

The complaint asserted that King knew (or was acting recklessly if he did not know) that his proclamations about his fund, his skills and his relationships with brokerage firms were misleading.

“As an investment adviser and fiduciary, King’s conduct was a departure from the ordinary standard of care expected of a fiduciary,” the complaint read. “King’s conduct in offering and selling securities issued by Elevate, while misrepresenting Elevate’s rates of return and relationships with trusted brokers, and his skill as an investment adviser, was a departure from the ordinary standard of care of a person offering and selling securities.”

A federal court ruling on Dec. 28 affirmed the SEC's request for a temporary restraining order, which froze the assets for King, Shannon King and Elevate as a company, while mandating that all parties provide an accounting, with a hearing set for Jan. 11 to discuss a preliminary injunction that would extend the agency’s emergency relief for the remainder of the case.

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