U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22744 / July 8, 2013
Securities and Exchange Commission v. John Fowler, Jeffrey Fowler, and Julianne Chalmers, Civil Action No. 8:13-cv-1747-T-17TGW
The Securities and Exchange Commission today announced that it filed an enforcement action on July 5, 2013 against John Fowler, a convicted felon, Jeffrey Fowler, a former Florida public school teacher, and Julianne Chalmers. The SEC charged John Fowler and Jeffrey Fowler with violations of the antifraud provisions of the federal securities laws. The SEC also charged John Fowler and Julianne Chalmers with registration violations.
From January 2011 through November 2011, John Fowler and Jeffrey Fowler raised approximately $4.3 million from 70 unsuspecting investors nationwide through a Ponzi scheme disguised as a gold futures investment program. The program purportedly was affiliated with a prominent New York-based hedge fund manager but actually had no connection to this manager and no investment in gold futures. Chalmers solicited investors to invest in the gold futures program by purchasing promissory notes.
The SEC’s complaint, filed in the United States District Court for the Middle District of Florida, alleges that John Fowler masterminded the Ponzi scheme and made misrepresentations and omissions in connection with the offer and sale of the promissory notes. He solicited at least one prospective investor, falsely claiming that a prominent hedge fund manager was the general partner of the investment program, that investor returns were guaranteed, and that he was a fellow investor. The complaint alleges that he also prepared fake promissory notes and assignments of security, and signed them as trustee of the prominent hedge fund manager. Finally, the complaint alleges that John Fowler misappropriated investor funds and unlawfully sold unregistered securities.
The complaint alleges that John Fowler’s son, Jeffrey Fowler, took steps to make the scheme appear legitimate by forming a Florida corporation with an identical name to the actual New York-based hedge fund manager and opening several bank accounts in this corporate name. Investors deposited their funds into this account and Jeffrey Fowler made purported interest payments to investors from these funds. Jeffrey Fowler also allegedly misappropriated investor funds for personal use.
The SEC’s complaint also alleges that by soliciting investors into the scheme, Chalmers unlawfully acted as an unregistered broker-dealer and sold unregistered securities that did not qualify for an exemption from the SEC’s registration provisions. Chalmers received more than $90,000 of investor proceeds in transaction-based commissions.
The SEC’s enforcement action charges John Fowler with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5(a) and 10b-5(c) thereunder; and Jeffrey Fowler with violating Sections 17(a)(1) and (3) of the Securities Act and Section 10(b) of the Exchange Act and Rules 10b-5(a) and 10b-5(c) thereunder. The action charges Chalmers with violating Sections 5(a) and 5(c) of the Securities Act and Section 15(a) of the Exchange Act. Both John Fowler and Jeffrey Fowler have consented to the entry of judgments, which would enjoin then from violation of the above provisions. These judgments are subject to court approval. The SEC is seeking a permanent injunction, disgorgement, and financial penalties against Chalmers.
The U.S. Attorney’s Office for the Middle District of Florida conducted a parallel investigation of this matter, which resulted in felony convictions against John Fowler and Jeffrey Fowler. Both Fowlers are currently serving prison sentences. U.S. v. John Henley Fowler, 8:12-CR-359-T-35TGW (M.D. Fla. 2012); U.S. v. Jeffrey Robert Fowler, 8:12-CR-358-T-24EAJ (M.D. Fla. 2012).
The SEC’s investigation was conducted by Miami Regional Office enforcement staff Cecilia Danger and Tonya Tullis and supervised by Chad Alan Earnst. The SEC’s litigation will be led by Christine Nestor.
The SEC acknowledges assistance from the U.S. Attorney’s Office for the Middle District of Florida, the United States Secret Service, and the Federal Bureau of Investigation.