U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20904 / February 18, 2009
SEC v. William L. Walters , (United States District Court for the District of Colorado, Civil Action No. 09-cv-00337-REB-MEH
SEC Charges Former Registered Representative William L. Walters With Fraud Arising From Ponzi Scheme
The United States Securities and Exchange Commission announced that it has filed securities fraud and other charges against former registered representative, William L. Walters, formerly of Lone Tree, Colorado for operating a Ponzi scheme promising annual returns ranging from 20% to 40%.
According to the Complaint, from 2003 through 2006, Walters raised approximately $16.8 million from more than 80 investors under the false pretense that he would invest their funds in day trading in the securities markets. As set forth in the Complaint, Walters lured investors with the promise of high returns which he falsely claimed he could achieve based on his personal expertise and prior success in day trading. In reality, the Commission alleges, Walters deposited only a small fraction of investor funds into brokerage accounts, conducted very little trading in these accounts, and sustained heavy losses on the trading he did conduct. The Commission further alleges that Walters used approximately $11.4 million of investor funds to pay off prior investors in a classic Ponzi scheme pattern, using the rest largely to support his lavish lifestyle, with expensive cars and homes in Colorado and Hawaii.
The Commission's Complaint, filed in federal district court for the District of Colorado, charges Walters with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 15(a) and 10(b) of the Securities Exchange of 1934, and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission seeks the entry of an injunction, an accounting, disgorgement, and civil monetary penalties.
The Commission acknowledges the assistance of the Colorado Division of Securities, the Colorado Attorney General's Office and the Hawaii Department of Commerce and Consumer Affairs in connection with this matter.