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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 21264 / October 28, 2009

United States Securities Exchange Commission v. Charles R. Kokesh Civil Action No. 6:09-cv-1021 (D.N.M.) (October 27, 2009)

SEC Charges New Mexico Man with Misappropriating $45 Million Dollars

On October 27, 2009, the Securities and Exchange Commission (“Commission”) filed a civil injunctive action against Charles R. Kokesh for his role in defrauding at least 21,000 investors in four business development companies (“BDCs”) through a variety of schemes and contrivances.

The Commission’s complaint alleges that:

  • From at least 1995 through July 2007, Kokesh controlled two now-defunct Commission-registered investment-adviser firms (the “Advisers”), which in turn controlled and provided investment advice to the BDCs.
     
  • Acting by and through the Advisers, Kokesh misappropriated approximately $45 million of investor funds by causing the BDCs to pay illegal distributions, performance fees, and expense reimbursements to the Advisers.
     
  • To conceal the scheme, Kokesh caused the Advisers to distribute misleading proxy statements to BDC investors and to file false Commission reports on behalf of the BDCs.

The Commission’s complaint, filed in United States District Court in New Mexico, alleges that Kokesh violated Section 37, or in the alternative Section 57, of the Investment Company Act, and aided and abetted violations of Sections 13(a) and 14(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-13, and 14a-9 thereunder, and Sections 205, 206(1) and 206(2) of the Investment Advisers Act.

The Commission seeks a permanent injunction against further violations of the securities laws, disgorgement plus prejudgment interest, and civil money penalties.

SEC Complaint in this matter

 

 

http://www.sec.gov/litigation/litreleases/2009/lr21264.htm


Modified: 10/28/2009