United States of America
In the Matter of
Raymond C. Mohr,
|ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 203(f) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS|
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Raymond C. Mohr ("Respondent" or "Mohr").
In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the "Offer") which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings, and the findings contained in Section III.3 below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions ("Order"), as set forth below.
On the basis of this Order and Respondent's Offer, the Commission finds that:
1. Mohr, age 38, resided during the relevant time period in Wayne, Pennsylvania. From December 1988 until February 1996, Mohr was employed as a registered representative in the Philadelphia office of a national broker-dealer registered with the Commission (the "Broker-Dealer").
2. From at least 1993 until the Fall of 2001, Mohr acted as an unregistered investment adviser, outside of the scope of his association with the Broker-Dealer.
3. On August 13, 2003, a final judgment was entered by consent against Mohr, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act, in the civil action entitled Securities and Exchange Commission v. Raymond C. Mohr, Civil Action Number 03-CV-4540 (CG)(E.D.Pa.), in the United States District Court for the Eastern District of Pennsylvania.
4. The Commission's complaint alleged that, from at least June 1993 until the Fall of 2001, Mohr knowingly engaged in a scheme to defraud investors and misappropriate investor funds. Beginning in or about June 1993, while employed as a registered representative, Mohr began soliciting individuals by means of material misrepresentations and omissions to become advisory clients and invest funds with him. Mohr lured potential clients with promises that they would receive high annual returns of as much as 100 to 200 percent from their investment of funds with him. Mohr represented, both orally and in "investment agreements" he prepared and executed with each client, that he would achieve these high returns by investing their funds in publicly traded securities, primarily equity options, and in futures contracts.
5. During the course of his fraudulent scheme, Mohr raised approximately $9.6 million from 87 clients located in Pennsylvania and New Jersey. Most of Mohr's clients were individuals he met through his position as a registered representative of the Broker-Dealer or friends and social acquaintances he met through his membership in several Philadelphia social clubs and fraternal organizations. Investors either transferred their funds to Mohr by wire or paid by check.
6. Contrary to his representations, Mohr used his clients' funds to engage in a "ponzi" like scheme in which he misappropriated client funds and used them for his own personal use and to make payments of principal and purported profits to earlier investors. Ultimately, Mohr's fraudulent scheme resulted in client losses of approximately $3.1 million.
7. While employed as a registered representative, Mohr concealed his activities from his employer. In February 1996, Mohr resigned from the Broker-Dealer and began devoting himself full-time to running his fraudulent scheme.
8. Over the course of the scheme, Mohr paid a total of $7.9 million in principal and purported profits to clients and used the remaining $1.7 million for personal expenses. Mohr's personal use of client funds included payment of his credit card and other personal debts, residential apartment rent, a down payment on a house, the purchase of two automobiles and various travel and entertainment expenses.
9. Mohr concealed his misappropriation of client funds by preparing and sending his clients periodic fictitious account statements that falsely reported securities transactions that he never made on their behalf.
10. In the Fall of 2001, Mohr stopped communicating with his clients. On January 10, 2002, Mohr filed for bankruptcy.
11. As a result of the conduct described above, Mohr willfully violated:
Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in the offer or sale of securities and in connection with the purchase or sale of securities, by use of the means or instruments or instrumentalities of transportation or communication in interstate commerce or by use of the mails, in that he, directly or indirectly, employed devices, schemes or artifices to defraud; obtained money or property by means of, or otherwise made, untrue statements of material fact or omitted to state material facts necessary in order to make the statements made, in light of the circumstance under which they were made, not misleading; or engaged in acts, transactions, practices or courses of business which operated or would operate as a fraud or deceit upon any person, as more particularly described in Paragraphs 3 through 10 above.
Sections 206(1) and 206(2) of the Advisers Act, in that he, while acting as an investment adviser, by use of the mails or the means or instrumentalities of interstate commerce, directly or indirectly: (a) employed devices, schemes or artifices to defraud clients or prospective clients; and (b) engaged in transactions, practices or courses of business which operated as a fraud or deceit upon clients or prospective clients, as more particularly described in Paragraphs 3 through 10 above.
In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Respondent Mohr's Offer.
ACCORDINGLY, IT IS HEREBY ORDERED:
Pursuant to Section 15(b)(6) of the Exchange Act and Section 203(f) of the Advisers Act, that Respondent Mohr be, and hereby is, barred from association with any broker, dealer, or investment adviser.
By the Commission.
Jonathan G. Katz
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