U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23616 / August 10, 2016
Securities and Exchange Commission v. Merrill Robertson, Jr., et al., Civil Action No. 3:16-cv-667
SEC Charges Former Professional Football Player with Running a $10 Million Fraud
Washington, D.C., Aug. 10, 2016 - The Securities and Exchange Commission today charged Merrill Robertson Jr., a former player for the Philadelphia Eagles, with defrauding investors, including former coaches he knew from his time playing football for the Fork Union Military Academy and the University of Virginia.
The SEC's complaint, filed in federal court in Richmond, Virginia, charges Robertson, Sherman C. Vaughn, Jr. and the company they co-owned, Cavalier Union Investments LLC. According to the complaint, the defendants promised to invest in diversified holdings but diverted nearly $6 million of the more than $10 million they raised from investors to pay for personal expenses and used other funds to repay earlier investors.
Robertson and Vaughn, both of Chesterfield, Virginia, are alleged to have lied about the unregistered debt securities they sold, saying they would yield as much as 20 percent "while providing safety and security for our investors." According to the complaint, the defendants claimed that Cavalier had investment funds operated by experienced investment advisers, when it did not have any funds or investment advisers and was functionally insolvent shortly after it was formed. The defendants allegedly hid this fact from potential investors and relied on cash from new investors to stay afloat. The complaint further alleges that Cavalier's only investments were in restaurants that had all failed by 2014, something the defendants never disclosed as they continued soliciting and accepting investors' money. The scheme allegedly targeted seniors and coaches, donors, alumni, and employees of schools Robertson had attended.
In a parallel action, the U.S. Attorney's Office for the Eastern District of Virginia today announced criminal charges against Robertson.
The SEC's complaint alleges that Robertson, Vaughn, and Cavalier violated the antifraud provisions of the securities laws in Section 17(a) of the Securities Act of 1933 (Securities Act), and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, as well as the registration provisions of the securities laws in Sections 5(a) and 5(c) of the Securities Act. The Commission's complaint seeks permanent injunctions, return of allegedly ill-gotten gains with prejudgment interest, and civil penalties.
The SEC's investigation, which is continuing, has been conducted by Lawrence D. Parrish, Dustin Ruta, and Kingdon Kase of the Philadelphia Office, and was supervised by G. Jeffrey Boujoukos. The SEC's litigation will be led by David L. Axelrod and John V. Donnelly. The SEC appreciates the assistance of the U.S. Attorney's Office for the Eastern District of Virginia and the Federal Bureau of Investigation.
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