U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18273 /August 6, 2003
Securities and Exchange Commission v. Raymond C. Mohr,
Civil Action No. 03-CV-4540(CG)(E.D.Pa)
SEC Charges Unregistered Investment Adviser with Securities Fraud
The Securities and Exchange Commission announced today that it has filed a settled civil injunctive action in the United States District Court for the Eastern District of Pennsylvania against Raymond C. Mohr ("Mohr"), formerly of Wayne, Pennsylvania, for violating the antifraud provisions of the federal securities laws. The Commission's complaint alleges that, from at least June 1993 until the fall of 2001, Mohr knowingly engaged in a ponzi scheme in which he obtained approximately $9.6 million from 87 investors. Mohr misappropriated the funds for his personal use and to fund payments of principal and purported profits to clients who had invested at earlier points in time. Over the course of the eight years during which Mohr operated the ponzi scheme, Mohr paid approximately $7.9 million in principal and purported profits to investors and used the remaining $1.7 million for his own personal use. Ultimately, Mohr's fraudulent scheme resulted in client losses of approximately $3.1 million. Simultaneously with the filing of the complaint, Mohr settled the action. Mohr consented, without admitting or denying the allegations in the complaint, to the entry of a final judgment permanently enjoining him from future violations of the antifraud provisions of the federal securities laws. Mohr has also consented to a bar from the investment advisory and broker-dealer industries.
The complaint alleges that Mohr, a former registered representative and unregistered investment adviser, solicited investors to become advisory clients and invest funds with him, promising annual returns of as much as 100 to 200 percent. Mohr represented that he would achieve these high returns by investing client funds in publicly traded securities, primarily equity options, and in futures contracts. Contrary to his representations, Mohr never invested his clients' funds. Instead, the complaint alleges Mohr deposited the funds into his personal checking account and used the funds for his own personal use and to make payments of principal and purported profits to earlier investors.
The complaint further alleges that Mohr executed "investment agreements" with each of his clients, which purported to set forth the terms of the arrangement under which he would take custody of and invest their funds. In addition, Mohr concealed his theft of funds by furnishing his clients with fictitious account statements that falsely reported securities transactions that had never occurred. Ultimately, Mohr's scheme collapsed. In the fall of 2001, Mohr stopped communicating with his clients. On January 10, 2002, Mohr filed for bankruptcy.
The complaint alleges that Mohr violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The complaint also alleges that Mohr violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission brought this action in coordination with the United States Attorney for the Eastern District of Pennsylvania, who filed related criminal charges against Mohr.
SEC Complaint in this matter