The FBI is investigating the alleged white collar crime of a man who many investors claim fraudulently misrepresented their investment portfolios. According to the complaints, the 56-year-old investor claimed that he was investing his client's money in low-risk, diversified funds.
Instead, the FBI alleges that he used investors' money to invest in high risk startups, most of which failed. Investigators believe that the man lost more than $46 million of his investors' money on fraudulent investments. The man is currently being investigated for money laundering and fraud, and is also facing an inquiry by the Securities and Exchange Commission.
Investigators say that he may have falsified documents and provided misleading written statements to his clients stating that their investment had remained in publicly traded securities, even months after the money had been moved to a private business in which the man had some financial interest.
While the FBI first began investigating the man's company after he attempted to go into receivership earlier in 2011, claiming that his company could no longer pay its bills, the SEC had received multiple complaints from investors starting last year. Four of the more than 100 investors that the FBI and SEC claims the man defrauded complained to the SEC that, contrary to his company's bylaws, they had discovered that he had invested their money elsewhere without notifying them. The man allegedly used the investors' money to meet the startup companies' payrolls, but the startups were still unable to turn a profit and failed.
The FBI has raided the man's residence and seized unreported amounts of evidence, but no charges have been filed as of yet. If he is charged and convicted, the man could be facing severe penalties.
Source: Seattle Post-Intelligencer: "FBI: Seattle investor lost millions of clients' money," Levi Pulkkinen, Oct. 2, 2011