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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 18940 / October 25, 2004

SEC v. Michael G. Beckford, Civil Action No. 04 C 6811 (N.D. Ill., filed October 22, 2004)

SEC FILES ACTION AGAINST MICHAEL G. BECKFORD FOR GAMBLING WITH INVESTOR FUNDS AND ENGAGING IN OTHER FRAUDULENT ACTIVIES

The U.S. Securities and Exchange Commission announced the filing of a Complaint in the United States District Court for the Northern District of Illinois against Michael G. Beckford, a former managing member of Fanam Capital Management (Fanam). Fanam was an unregistered investment adviser to Fanam Fund I (Fund), which held itself out as a hedge fund. The Commission's Complaint alleges that from at least February 2001 through April 2003, Beckford lost $776,344 of the Fund's money from gambling related activities. The Complaint also alleges that he lost $3,876,775 by trading outside the Fund's stated investment objectives and risk parameters, and that he misappropriated $175,010 for other personal uses, resulting in total investor losses of $4,828,129. Beckford issued false documents to the Fund's investors to cover-up his fraud.

The Complaint alleges that Beckford violated the antifraud sections of the Securities Act of 1933 and the Securities Exchange Act of 1934, and that he willfully aided and abetted violations of the antifraud sections of the Investment Advisers Act by Fanam. The Complaint requests that the Court enter an order permanently enjoining Beckford from violating Section 17(a) of the Securities Act of 1933, Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, and Sections 206(1) and (2) of the Investment Advisers Act. The Complaint also requests that the Court enter an order requiring Beckford to disgorge his ill-gotten gains and pay civil penalties.

The Commission coordinated its investigation with the U.S. Attorney's Office for the Northern District of Ohio and the Cleveland Office of the Federal Bureau of Investigation.

SEC Complaint in this matter


http://www.sec.gov/litigation/litreleases/lr18940.htm


Modified: 10/25/2004