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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20622 / June 18, 2008

SEC v. Stephen F. Clifford , (United States District Court for the District of Massachusetts, Civ. Action No. 09-08-CA-11023(RGS))

SEC Obtains Temporary Restraining Order and Asset Freeze Against Massachusetts-Based Investment Adviser Stephen F. Clifford

The Securities and Exchange Commission announced that it filed an emergency enforcement action today in federal district court in Massachusetts and obtained a temporary restraining order, an asset freeze and other relief against Stephen F. Clifford, a Massachusetts-based investment adviser, in connection with a scheme to defraud investors in an advisory business he called Clifford Financial Associates ("CFA"). The Commission's complaint alleges that Clifford, of Plymouth, Massachusetts, raised at least $2.9 million from at least eight investors in Massachusetts and Florida and that on June 4, 2008, while under arrest on unrelated charges, he made statements to the police indicating that he defrauded his investors of $3 million.

The Commission's complaint alleges that since at least July, 2004, Clifford has induced investors, many of them elderly, to entrust him with funds by (1) misrepresenting that he and CFA were registered investment advisors; (2) misrepresenting that he and CFA were affiliated with a particular registered investment adviser/broker-dealer when he was not; (3) guaranteeing a minimum return on investments; (4) promising yearly disbursements and then failing to make such payments in at least one year; and (5) falsely assuring investors of the safety of their investments. The Commission's Complaint further alleges that, after gaining control over the investors' funds, Clifford produced sporadic statements or reports purporting to show that the investors were earning money, but that he became evasive when investors asked for the return of their funds and ultimately stopped responding to their requests and communications.

The Commission's complaint alleges that Clifford violated Sections 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. The Honorable Richard G. Stearns issued a temporary restraining order against further violations of the securities laws, an order freezing Clifford's assets, an order prohibiting the acceptance of additional investor funds, an accounting of assets and an order prohibiting the alteration or destruction of relevant documents, as well as other relief. The Commission also seeks the entry of a permanent injunction, disgorgement of ill-gotten gains, plus pre-judgment interest and the imposition of civil monetary penalties against Clifford.

The Commission acknowledges the assistance of Massachusetts Secretary of State William Francis Galvin's Securities Division, which simultaneously brought an administrative cease-and-desist action against Clifford, and the Bourne, Massachusetts Police Department.

SEC Complaint in this matter

 

http://www.sec.gov/litigation/litreleases/2008/lr20622.htm

Modified: 10/01/2009