SEC Halts Multi-Million Dollar Fraud Conducted by Philadelphia-Area Investment Adviser

FOR IMMEDIATE RELEASE
2009-85

Washington, D.C., April 20, 2009 — The Securities and Exchange Commission has charged a Philadelphia-area investment adviser and its principal with misappropriating millions of dollars in client assets, and obtained an emergency court order freezing their assets.

The SEC alleges that through a commingled brokerage account, Donald Anthony Walker Young of Coatesville, Pa., and Acorn Capital Management, LLC misappropriated more than $23 million from investors buying limited partnership interests in Acorn II LP, which invested in publicly traded securities. Young used investor funds to pay other investors in the nature of a Ponzi scheme, and directly stole some of the money to purchase a vacation home in Palm Beach, Fla., and pay personal expenses related to horse ownership and racing, construction, boats, limousines, chartered aircraft and other luxuries. According to the SEC's complaint, the defendants refused to provide Commission staff with client files, account statements, general ledgers and other documents that are statutorily required to be maintained and produced by registered investment advisers.

"As alleged in our complaint, Young covered up his thefts by giving phony information to accountants who kept track of each investor's capital balance, and giving false statements to investors that didn't reflect the thefts," said Robert Khuzami, Director of the SEC's Division of Enforcement. "Young led investors to believe their money was being invested properly when in reality he was spending it unscrupulously."

Daniel M. Hawke, Director of the SEC's Philadelphia Regional Office, said, "Young repeatedly refused to provide Commission staff with required documents that would have revealed his scheme. The staff has gone to great lengths to develop the evidence necessary to halt this fraud."

The Honorable John R. Padova, U.S. District Judge for the Eastern District of Pennsylvania, issued an order on April 17 granting a temporary restraining order, freezing assets and imposing other emergency relief for investors.

According to the SEC's complaint, Young established Acorn II LP in 2001 and has nearly complete control of all aspects of the operations and makes all of the investment decisions. In addition, he has complete control of and access to the assets of Acorn II LP held at a broker-dealer. Young also controls the information provided to investors, accountants and the broker-dealer and he has used this information flow to provide false information about investor deposits and withdrawals, and to perpetuate the scheme.

The SEC alleges that although the Acorn II LP account currently holds approximately $3 million for approximately 40 investors, Young has told investors through quarterly and annual statements that their account balances are much higher. In February 2009, Young gave phony documents to employees at the broker-dealer to deceive them into believing that Acorn II LP held an additional $23 million at two other broker-dealers.

The SEC's complaint alleges violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 204, 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rules 204-2 and 206(4)-8 thereunder. In addition to the emergency relief, the Commission's complaint seeks disgorgement of the defendants' ill-gotten gains plus pre-judgment interest, financial penalties, and permanent injunctions barring future violations of the charged provisions of the federal securities laws.

The SEC's investigation is continuing.

The SEC acknowledges the assistance of the U.S. Attorney's Office for the Eastern District of Pennsylvania and the Federal Bureau of Investigation.

# # #

For more information, contact:

Daniel M. Hawke, Regional Director
Elaine C. Greenberg, Associate Regional Director
David S. Horowitz, Assistant Regional Director
SEC's Philadelphia Regional Office
215-597-3100