SEC Charges Investment Adviser and Manager in South Florida-Based Fraud
The Securities and Exchange Commission today announced fraud charges and an asset freeze against a Fort Lauderdale, Florida-based investment advisory firm, its manager, and three related funds in a scheme that raised more than $17 million since November 2013.
The SEC’s complaint filed in federal court in the Southern District of Florida last week charged Elm Tree Investment Advisors LLC, its founder and manager, Frederic Elm, and Elm Tree Investment Fund LP, Elm Tree “e”Conomy Fund LP, and Elm Tree Motion Opportunity LP. According to the complaint, Elm, formerly known as Frederic Elmaleh, his unregistered investment advisory firm, and the three funds misled investors and used most of the money raised to make Ponzi-like payments to the investors. The complaint alleges that Elm treated the funds as his personal piggy bank, tapping them to buy a $1.75 million home, luxury automobiles, and jewelry, and to cover daily living expenses. Elm’s wife, Amanda Elm, formerly Elmaleh, is named as a relief defendant based on her receipt of investor monies.
"Elm misled investors about how he and his funds would use their money and about how much he charged them in fees," said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. "As a result, Elm was able to wrongfully take millions of dollars from investors without their knowledge."
The SEC's complaint charges Elm, his advisory firm and the Elm Tree funds with violating anti-fraud provisions of federal securities laws and SEC anti-fraud rules. The SEC is seeking relief for investors, including return of allegedly ill-gotten gains, with interest, and financial penalties.
The Honorable William Dimitrouleas on Friday granted the SEC’s request for a temporary restraining order and temporary asset freeze against Elm, his firm, and the three Elm Tree funds. The judge ordered a temporary asset freeze against Amanda Elm and required her and the other defendants to provide accountings. Judge Dimitrouleas also entered an order appointing Grisel Alonso as receiver for Elm Tree Investment Advisors and the Elm Tree funds. A court hearing has been scheduled for January 29.
The SEC's investigation, which is continuing, has been conducted by Katharine E. Zoladz and Mark Dee and supervised by Elisha L. Frank in the Miami Regional Office. Patrick Costello is leading the SEC’s litigation.