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U.S. Securities and Exchange Commission

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA


SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,   

v.

RAYMOND C. MOHR,

Defendant.   


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Civil Action No. 03-4540

COMPLAINT

Plaintiff Securities and Exchange Commission ( the "Commission") alleges as follows:

PRELIMINARY STATEMENT

1. This matter involves fraud and misappropriation of investor funds by Raymond C. Mohr ("Mohr"), an unregistered investment adviser. In or about June 1993, Mohr began soliciting individuals to become advisory clients and invest funds with him, promising annual returns of as much as 100 to 200 percent. Mohr generally represented to prospective clients that he would achieve these high returns by investing their funds in publicly traded securities, primarily equity options, and in futures contracts. In addition, Mohr typically represented that he would retain fifty percent of the profits from his trading as compensation.

2. During the course of his fraudulent scheme, Mohr raised approximately $9.6 million from 87 clients to invest for various periods on their behalf. Contrary to his representations, Mohr used his clients' funds to engage in a "ponzi" like scheme in which he misappropriated their funds and used them for his personal use and to fund payments of principal and purported profits to clients who had invested at earlier points in time. Ultimately, Mohr's fraudulent scheme resulted in client losses of approximately $3.1 million. Mohrmisappropriated approximately $1.7 million of his clients' funds for his own personal use, including 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.

3. By knowingly engaging in the conduct described in this Complaint, defendant Mohr has violated, and unless restrained and enjoined will continue to violate, Section 17(a) of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. § 77q(a); Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78j(b) and Rule 10b-5, 17 C.F.R. § 240.10b-5, thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 ("Advisers Act"), 15 U.S.C. § 80b-6(1) and 15 U.S.C. § 80b-6(2).

JURISDICTION AND VENUE

4. The Commission brings this action pursuant to the authority conferred upon it by Section 20(b) of the Securities Act, 15 U.S.C. § 77t(b), Sections 21(d) and (e) of the Exchange Act, 15 U.S.C. §§ 78u(d) and (e), and Section 209 (d) of the Advisers Act, 15 U.S.C. § 80b-9(d), to enjoin such acts, transactions, practices and courses of business, and for other appropriate relief.

5. This Court has jurisdiction over this action pursuant to Section 22(a) of the Securities Act, 15 U.S.C. § 77v(a), Section 27 of the Exchange Act, 15 U.S.C. § 78aa, and Section 214 of the Advisers Act, 15 U.S.C. § 80b-14.

6. Certain of the acts, transactions, practices and courses of business constituting the violations alleged herein occurred within the Eastern District of Pennsylvania and elsewhere, and were effected, directly or indirectly, by making use of the means and instruments oftransportation and communication in interstate commerce, or the means and instrumentalities of interstate commerce, or the mails, or the facilities of a national securities exchange.

DEFENDANT

7. Raymond C. Mohr, age 38, resided during the relevant time period in Wayne, Pennsylvania. Mohr was employed as a registered representative in the Philadelphia office of a national broker-dealer from December 1988 until February 1996.

FACTS

8. 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, 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 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.

9. During the course of his fraudulent scheme, Mohr obtained approximately $9.6 million from 87 clients located in Pennsylvania and New Jersey. Most of Mohr's clients were friends and social acquaintances he met through his membership in several Philadelphia social clubs and fraternal organizations. Advisory clients either transferred their funds to Mohr by wire or paid by check.

10. While employed as a registered representative at a national broker-dealer, Mohr concealed his activities from his employer. In February 1996, Mohr resigned from the firm andbegan devoting himself full time to running his fraudulent scheme. During the course of his scheme, Mohr acted as an unregistered investment adviser.

11. Mohr knowingly concealed his fraudulent scheme and lulled his clients by giving them false assurances concerning their purported investments. For example, Mohr entered into fictitious "investment agreements" with each of his clients, which purportedly contained the terms of the arrangement under which he would take custody of and invest their funds. The investment agreements generally set forth, among other things, a description of the types of investments Mohr intended to make on behalf of the client and Mohr's fee, which was typically 50 percent of the profits derived from the clients' investments. In addition, Mohr prepared and sent to his clients fictitious periodic account statements, generally through the use of the U.S. mails. These fictitious statements contained detailed descriptions of specific investment transactions Mohr claimed to have made with his clients' funds. None of the investments set forth in the investment agreements or account statements were ever made by Mohr.

12. Contrary to his representations, Mohr never invested his clients' funds and, instead, used them to engage in a "ponzi" like scheme. In reality, Mohr deposited client funds in his personal checking account, 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.

13. Of the $9.6 million received from investors, Mohr paid a total of $7.9 million to his clients in principal and purported profits and used the remaining $1.7 million for his own personal use, including 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.

14. Ultimately, Mohr's scheme collapsed. In the fall of 2001, Mohr stopped communicating with his clients. On January 10, 2002, Mohr filed for bankruptcy.

FIRST CLAIM FOR RELIEF
Violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder

15. The Commission realleges and incorporates by reference each and every allegation in Paragraphs 1 through 14 above as if the same were fully set forth herein.

16. Between at least June 1993 and the fall of 2001, as a result of the conduct alleged herein, defendant Mohr, knowingly or recklessly, in connection with the offer, purchase or sale of securities, directly and indirectly, by use of the means or instruments of transportation or communication in interstate commerce, or the means or instrumentalities of interstate commerce, or the mails, or the facilities of a national securities exchange:

  1. employed devices, schemes or artifices to defraud;

  2. obtained money or property by means of, or made, untrue statements of material fact, or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and

  3. engaged in acts, transactions, practices, or courses of business which operated as a fraud or deceit upon offerees, purchasers and prospective purchasers of securities.

17. By reason of the foregoing, defendant Mohr knowingly violated Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a); Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b); and Rule 10b-5, 17 C.F.R. § 240.10b-5, thereunder.

SECOND CLAIM FOR RELIEF
Violations of Sections 206(1) and 206(2) of the Advisers Act

18. The Commission realleges and incorporates by reference each and every allegation in Paragraphs 1 through 17 above as if the same were fully set forth herein.

19. During all relevant times, Mohr was an investment adviser within the meaning of Section 202(a)(11) of the Advisers Act, 15 U.S.C. § 80b-2(a)(11). Mohr acted as an investment adviser to the aforementioned clients because he rendered advice to them as to the advisability of investing in, purchasing, or selling securities; was in the business of rendering such advice; and was compensated for rendering such advice.

20. Between at least June 1993 and the fall of 2001, as a result of the conduct alleged herein, defendant Mohr, knowingly or recklessly, by use of the mails or the means and instrumentalities of interstate commerce, directly or indirectly:

  1. employed devices, schemes or artifices to defraud clients or prospective clients; and

  2. engaged in transactions, practices or courses of business which operated as a fraud and deceit upon such clients or prospective clients.

21. By reason of the foregoing, defendant Mohr knowingly violated Sections 206(1) and 206(2) of the Advisers Act, 15 U.S.C. § 80b-6(1) and 15 U.S.C. § 80b-6(2).

WHEREFORE, the Commission respectfully requests that this Court:

I.

Permanently restrain and enjoin defendant Mohr, and his agents, officers, servants, employees, attorneys, and those persons in active concert or participation with him, directly orindirectly, singly or in concert, from violations of Section 17(a) of the Securities Act, 15 U.S.C. § 77(q)a; Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b); and Rule 10b-5, 17 C.F.R. § 240.10b-5, thereunder.

II.

Permanently restrain and enjoin defendant Mohr, and his agents, officers, servants, employees, attorneys, and those persons in active concert or participation with them, directly or indirectly, singly or in concert, from violations of Sections 206(1) and 206(2) of the Advisers Act, 15 U.S.C. §§ 80b-6 (1) and 80b-6 (2).

III.

Grant such other and further relief as the Court may deem just and appropriate.

Respectfully submitted,

________________________________
Merri Jo Gillette, PA Bar No. 37075
Elaine C. Greenberg, PA Bar No. 48040
Mark R. Zehner, PA Bar No. 41186
John J. Heffernan, PA Bar No. 70602
Counsel for Plaintiff
Securities and Exchange Commission
701 Market Street, Suite 2000
Philadelphia, Pennsylvania 19106
(215) 597-3100
(215) 597-3194 (fax)

Dated: August 6, 2003

 

http://www.sec.gov/litigation/complaints/comp18273.htm


Modified: 08/06/2003