Charleston investment fund manager admits to $20 million securities fraud scheme
CHARLESTON, S.C. (WCSC) - The United States Attorney’s Office says a South Carolina investment fund manager pleaded guilty to misleading investors out of $20 million.
George Heckler, 64, of Charleston pleaded guilty by videoconference before U.S. District Judge Madeline Cox Arleo to an information charging him with one count of securities fraud, The United States Attorney’s Office for the District of New Jersey said.
Acting U.S. Attorney Rachael A. Honig said Heckler admitted his role in a scheme to fraudulently obtain over $20 million from investors through misrepresentations about trading strategy and fund performance.
According to documents filed in this case and statements made in court Heckler managed, controlled or was involved with multiple investment funds.
From 2014 to 2018, court documents state Heckler misrepresented to investors that he would invest their funds in particular trading strategies. Instead, the Attorney’s Office says he diverted their funds out of two of his funds for purposes inconsistent with trading strategies.
Court records say Heckler also used investors’ funds to cover investment losses suffered by other funds under his management and/or control.
The District Attorney’s Office says Heckler solicited investments from a victim and claimed the investments would be invested in one of his funds that employed a “first loss” trading strategy intended to protect investors from losses.
However, as of December 2013, lawyers say the fund no longer had a brokerage account that was necessary to employ the represented trading strategy. Despite the fund no longer having a brokerage account, in 2014, Heckler represented to the victim that the fund was still engaged in a first loss trading strategy and solicited the victim’s investment in the fund.
In September 2014, the Attorney’s Office says the victim invested approximately $9.1 million in the fund, relying on Heckler’s representation that victim’s money would be invested consistent with the fund’s first loss trading strategy. They say Heckler used $4.6 million of victim’s investment to repay existing investors and the remainder to satisfy other obligations Heckler owed that were unrelated to the fund.
Over the course of the scheme, Heckler sent out statements to investors that misled them into believing the value of their investments was increasing, when, in fact, the value was declining, the District Attorney’s Office said. They say Heckler took approximately $1 million in fees and distributions from the fraudulently obtained investments for his personal use.
The District Attorney’s Office says the securities fraud count carries a maximum penalty of 20 years in prison and a $5 million fine. They say the U.S. Securities and Exchange Commission has filed a civil complaint against Heckler based on the allegations underlying the securities fraud charge.
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