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U.S. Securities and Exchange Commission


Litigation Release No. 21006 / April 20, 2009

SEC v. Donald Anthony Walker Young, et al., Case No. 09-cv-01634 (JRP) (E.D. Pa.)


The Securities and Exchange Commission announced that, on April 17, 2009, it charged a Philadelphia-area investment adviser and its principal with misappropriating millions of dollars in client assets, and obtained an emergency court order freezing their assets. According to the Commission's complaint, since mid-2005 Donald Anthony Walker Young, of Coatesville, Pennsylvania, through Acorn Capital Management, LLC ("Acorn Capital"), a registered investment adviser controlled by Young, has misappropriated more than $23 million from investors buying into limited partnership interests in Acorn II, L.P., ("Acorn LP") which invested in publicly traded securities. Young used investor funds to pay other investors in the nature of a Ponzi scheme, and directly stole some of the money to purchase a vacation home in Palm Beach, Florida, and pay personal expenses related to horse ownership and racing, construction, boats, limousines, chartered aircraft and other luxuries. He has also directed funds to others. According to the Commission's complaint, the defendants refused to provide Commission staff with client files, account statements, general ledgers and other documents that are statutorily required to be maintained and produced by registered investment advisers.

The Honorable John R. Padova, U.S. District Judge for the Eastern District of Pennsylvania, has issued an order granting a temporary restraining order, freezing assets, and imposing other emergency relief. The Court also froze the assets of three named relief defendants — Oak Grove Partners, L.P., W. B. Dixon Stroud, Jr. and Neely Young, Young's wife.

The Commission's complaint alleges that Young established Acorn LP in 2001 for the purpose of investing in securities, and he has nearly complete control of all aspects of the operations and makes all of the investment decisions. In addition, he has complete control of and access to the assets of Acorn LP held at a broker-dealer. Young also controls the information provided to investors, accountants and the broker-dealer and he has used this information flow to provide false information about investor deposits and withdrawals, and to perpetuate the scheme.

The complaint further alleges that, although the Acorn LP account currently holds approximately $3 million for approximately 40 investors, Young has told investors through quarterly and annual statements that their account balances are much higher. In February 2009, Young gave phony documents to employees at the broker-dealer to deceive them into believing that Acorn LP held an additional $23 million at two other broker-dealers.

The complaint alleges violations of 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 204, 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rules 204-2 and 206(4)-8 thereunder. In addition to the emergency relief already obtained, the complaint seeks disgorgement of the defendants' ill-gotten gains plus pre-judgment interest, civil penalties, and permanent injunctions barring future violations of the charged provisions of the federal securities laws. The complaint also seeks disgorgement from the relief defendants.

The Commission's investigation is continuing.

The Commission acknowledges the assistance of the U.S. Attorney's Office for the Eastern District of Pennsylvania, and the Federal Bureau of Investigation.

SEC Complaint



Modified: 04/20/2009