U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21167 / August 4, 2009
United States Securities Exchange Commission v. Omar Ali Rizvi, Bellwether Venture Capital Fund I, Inc., and Strategy Partners, LLC, Civil Action No. 4:09-CV-371 (N.D. Tx)
SEC Charges Three for their Roles in a Fraudulent, Unregistered Securities Offering
On July 31, 2009, the Securities and Exchange Commission ("Commission") filed a complaint in United Stated District Court for the Northern District of Texas, charging Omar Ali Rizvi, Bellwether Venture Capital Fund I, Inc., and Strategy Partners, LLC for their roles in operating an unregistered investment company and an unregistered broker-dealer as vehicles for a fraudulent securities offering.
The Commission's complaint alleges that from August 2004 through at least June 2005, Rizvi raised over $1.8 million from over 170 investors in a fraudulent, unregistered securities offering on behalf of Bellwether, an unregistered investment company that Rizvi controlled. The complaint alleges that Rizvi raised those funds through Strategy Partners, an unregistered broker that Rizvi also controlled. The complaint further alleges that, during the offering, Rizvi misrepresented or omitted to disclose to investors numerous material facts regarding his personal and professional background, the professionals employed by Bellwether and Strategy Partners, the payment of commissions, and Bellwether's investment returns. In addition, the complaint alleges that Rizvi misappropriated and misapplied nearly $1.2 million of the offering proceeds.
As a result of the conduct described in the complaint, the Commission alleges that Rizvi violated Sections 5(a), 5(c), and 17(a) of the Securities Act, Sections 10(b), and 15(a)(1) of the Exchange Act and Rule 10b-5 thereunder; Bellwether violated Sections 5(a) and 5(c) of the Securities Act, and Section 7(a) of the Investment Company Act; and Strategy Partners violated Sections 5(a) and 5(c) of the Securities Act and Section 15(a)(1) of the Exchange Act.
The Commission seeks permanent injunctions against further violations of the securities laws, disgorgement plus prejudgment interest, and civil money penalties from each defendant.
In a related administrative proceeding against Ryan Douglas Smith, without admitting or denying the Commission's findings, Smith consented to an order finding that Smith willfully aided and abetted and caused violations of the registration provisions of the Investment Company Act. The order directs Smith to cease and desist from causing any violations and any future violations of Section 7(a) of the Investment Company Act. In the Matter of Ryan Douglas Smith, Investment Company Act of 1940 Release No. , August 2, 2009.