U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23459 / February 3, 2016
Securities and Exchange Commission v. American Growth Funding II, LLC, Portfolio Advisors Alliance, Inc., Ralph C. Johnson, Howard J. Allen III, and Kerri L. Wasserman, Civil Action No. 16-cv-00828 (S.D.N.Y.)
SEC Charges Lending Company and Brokerage Firm with Fraud
On February 3, 2016, the Securities and Exchange Commission charged a Manhattan-based lending company and its owner with repeatedly lying to investors purchasing high-yield securities. The SEC also charged the brokerage firm that acted as the placement agent and two of its executives.
The SEC alleges that American Growth Funding II LLC and Ralph Johnson promised investors 12-percent annual returns and falsely claimed its financial statements were being audited each year. AGF II, which raises capital from investors to provide loans to businesses, also made misrepresentations in offering documents about its management and concealed details about deteriorating loan values that could imperil full payment of the promised returns to investors. The company's placement agent Portfolio Advisors Alliance and its owner Howard Allen and president Kerri Wasserman allegedly knew the offering documents were inaccurate yet continued using them to solicit sales of AGF II securities.
According to the SEC's complaint filed in federal district court in Manhattan:
The SEC's complaint charges AGF II, PAA, Johnson, and Allen with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint also charges Johnson, Allen, and Wasserman with aiding and abetting and control person liability.
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