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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

INVESTMENT ADVISERS ACT OF 1940
Release No. 2323 / November 9, 2004

Admin. Proc. File No. 3-11664


In the Matter of

ADAM G. KRUGER,



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ORDER MAKING FINDINGS AND IMPOSING SANCTION BY DEFAULT

The Securities and Exchange Commission (Commission) initiated this proceeding on September 15, 2004, pursuant to Section 203(f) of the Investment Advisers Act of 1940. Respondent Adam G. Kruger (Kruger) was served with the Order Instituting Proceedings (OIP) on September 21, 2004. Kruger's Answer was due on October 12, 2004. See 17 C.F.R. 201.220(b); OIP at 2. To date, Kruger has not filed an Answer.

On October 19, 2004, the Division of Enforcement (Division) filed a motion for entry of default against Kruger for failing to answer the OIP. On October 21, 2004, I ordered Kruger to show cause by October 29, 2004, why he should not be held in default and why he should not be permanently barred from association with any investment adviser. On November 5, 2004, the Division renewed its motion for default. As of today, Kruger has not shown such cause.

Kruger is in default for failing to answer the OIP within the time provided. 17 C.F.R. 201.155(a), .220(f). Pursuant to Rule 155(a) of the Commission's Rules of Practice, 17 C.F.R. 201.155(a), I find the following allegations in the OIP to be true:

Kruger, age 23, resided in Roselle, Illinois, during the relevant time. Kruger was associated with Kruger, Miller and Tummillo, Inc. (KMT), in his capacity as president. Kruger is not registered with the Commission in any capacity.

KMT is an unregistered investment adviser and was incorporated in Illinois on December 16, 1999. Kruger operated KMT's investment advisory business out of his home in Roselle, Illinois. In May 2003, the Illinois Secretary of State dissolved KMT. KMT has since ceased operations.

On November 19, 2003, the Commission filed a complaint in the United States District Court for the Northern District of Illinois against Kruger and KMT captioned SEC v. Kruger, No. 03 C 8288. The complaint alleged that Kruger operated two fraudulent investment schemes through KMT, raising at least $908,750 from at least twelve investors. The complaint alleged that, starting in approximately August 2000, Kruger represented to investors that he would pool their money to day-trade various stocks and would distribute the profits accordingly. The complaint further alleged that, in March 2001, Kruger began to represent to investors that he would pool their money into a "hedge fund" and use the fund to purchase stock in a privately held company named Efoora, Inc. According to the complaint, Kruger did not use investor funds for day-trading or for investments in Efoora, Inc., but instead used the funds to pay personal expenses, to pay off old investors, and to invest in other schemes. The complaint also asserted that, to conceal his fraud, Kruger made numerous oral and written misrepresentations to investors representing that the investments were producing high rates of return. Based on these allegations, the complaint asserted that Kruger and KMT violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition, the complaint asserted that KMT, aided and abetted by Kruger, violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.

On April 13, 2004, the court entered an order permanently enjoining Kruger and KMT from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. In a written consent, Kruger and KMT agreed to the entry of the order of permanent injunction and admitted the allegations of the complaint.

Based on the foregoing, I find that Kruger is in default and it is appropriate in the public interest to bar Kruger from association with any investment adviser.

Order

IT IS ORDERED, pursuant to Section 203(f) of the Investment Advisers Act of 1940, that Adam G. Kruger is hereby BARRED from association with any investment adviser.

_______________________
Lillian A. McEwen
Administrative Law Judge


http://www.sec.gov/litigation/admin/ia-2323.htm


Modified: 11/09/2004