A Greenwich, Connecticut-based investment advisor has been charged by the Securities and Exchange Commission with carrying out a fraudulent scheme, according to Financial Advisor.
The SEC filed a complaint in the U.S. District Court for the District of Connecticut against 62-year-old Jeffrey Arsenault, and two investment advisor firms he founded and controlled, Old Greenwich Capital Advisors and OGCP Management Co.
Regulators allege that between October 2014 and the present, Arsenault and the firms misappropriated the assets of two private funds the defendants advised and controlled to pay for Arsenault’s personal expenses and making unauthorized payments for the defendants’ benefits. The scheme allegedly misappropriated at least $4.1 million to fund a lavish lifestyle.
“To conceal their misappropriation from investors, the defendants falsely overstated the value of the funds’ investments in investor account statements and tax documents, including by falsely claiming that one of the private funds defendants controlled held substantial investments in the other private fund under their control even after the latter fund had ceased operating,” the SEC said in the filing.
According to the SEC, Arsenault and the firms tried, in part, “to cover up the missing assets caused by their misappropriation by falsely claiming the missing money had been reinvested in the related Four Seasons Fund even after the Four Seasons Fund had ceased to operate.”
It is alleged that the defendants “knew that the OGCP Fund account statements and related tax documents were false and misleading because they knew they were diverting money away from the funds,” and that they misled investors into believing losses were attributable to bad investments instead of their own misappropriation.
The SEC is seeking a civil monetary penalty against Arsenault and the firms, an injunction that would bar Arsenault from directly or indirectly acting as or being associated with any broker, dealer, or investment adviser and disgorgement of ill-gotten gains.
The attorneys at Lewitas Hyman have decades of experience dealing with securities fraud cases and have a deep understanding of how capital markets and financial service firms are intended to work to protect investors. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Lewitas Hyman at (888) 655-6002 or through our online contact form for a no-cost evaluation of your matter.
