U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22609 / February 5, 2013

Securities and Exchange Commission v. Timothy J. Roth, et al., Civil Action No. 11-cv-02079 (C.D. Ill.)

Former Investment Adviser Sentenced to 12 Years for Misappropriating Client Assets

The Securities and Exchange Commission announced that on January 31, 2013, the Honorable Michael M. Mihm of the United States District Court for the Central District of Illinois sentenced Timothy J. Roth to 151 months (12 years and 7 months) of incarceration followed by supervised release of 3 years and ordered Roth to pay $16,151,964 in restitution to his victims. Roth, a former investment adviser associated with Comprehensive Capital Management, Inc. ("Comprehensive"), pleaded guilty to one count of mail fraud and one count of money laundering in connection with his misappropriation of over $16 million worth of mutual funds from the accounts of eleven clients between 2004 and 2011. Roth, 56, of Stonington, Illinois, transferred the shares without the clients' authorization into an account he controlled, sold them, and used the proceeds to form and support several companies he owned or controlled and to fund his own securities trading.

The criminal charges arose out of the same facts that were the subject of an emergency civil action that the SEC filed against Roth on March 21, 2011. On that same day, the Court issued an order freezing Roth's assets and those of several companies he controlled. On March 31, 2013, the Court appointed a Receiver over Roth's assets and those of the companies he controlled. The SEC's complaint alleged that Roth worked for Comprehensive, a New Jersey-based registered investment adviser. The SEC's complaint alleged that from October 2010 through February 2011, Roth stole more than $6 million worth of mutual fund shares from several deferred compensation plans ("Plans") for whom he provided investment advice. Roth's theft of client assets was later determined to have been over $16 million. The SEC alleged that Roth, who worked out of Comprehensive's office near Urbana, Illinois, secretly caused his victims' mutual fund shares to be transferred to an account under his control, even though no such transfer had been requested or authorized by the clients. The SEC alleges that after selling the clients' shares, Roth funneled the cash proceeds to various accounts and companies under his control or for his benefit. According to the SEC's complaint, at the time he was engaging in his scheme, Roth did not tell the clients about the transfers.

As a result of his conduct, the SEC's complaint charged Roth with violations of Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and with aiding and abetting violations of Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940, and Rule 206(4)-2 thereunder.

For additional information, see Litigation Release No. 21895 (March 23, 2011).