U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23670 / September 30, 2016
Securities and Exchange Commission v. Ikenna Ikokwu, et al., Civil Action No. 16-cv-01950 (D.D.C. filed Sept. 30, 2016)
SEC Charges Investment Adviser and His Firms with Recommending Tax Lien Investment Scheme to Clients
The Securities and Exchange Commission today announced fraud charges against an investment adviser who recommended a Ponzi-like tax lien investment scheme to his clients.
According to the SEC's complaint, filed in the U.S. District Court for the District of Columbia, Ikenna Ikokwu, a resident of Cumming, Georgia, persuaded over 20 clients of his companies Winning the Money Game with Ike, Inc. ("WMGI") and Winning the Money Game, LLC ("WMG"), to collectively invest $5 million in securities issued by FutureGen Company, a company that, along with its principal, Lawrence P. Schmidt, was previously charged by the SEC with defrauding investors across the country in an investment scheme involving unregistered debt offerings. In exchange for persuading clients to invest in FutureGen, Ikokwu received undisclosed "kickbacks" of over $100,000 from FutureGen. Ikokwu allegedly told his clients that he did not receive compensation from any third party for providing investment advice but did not disclose the FutureGen kickbacks. He also allegedly told investors that he had conducted extensive due diligence into FutureGen prior to making his recommendation, when he actually did little or no research on the company. Finally, the complaint alleges that Ikokwu touted the performance of his own family's investments with Schmidt to clients when the largest of those investments was actually in default.
The SEC's complaint charges Ikokwu and his companies, WMGI and WMG, with violating Section 17(a) of the Securities Act, Sections 10(b) of the Securities Exchange Act of 1934 and Rule l0b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. In addition, the complaint charges Ikokwu and WMGI with violating Section 15(a)(1) of the Exchange Act. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties.
The SEC's investigation was conducted by Jack Easton, Dustin Ruta, and Kingdon Kase of the Philadelphia Regional Office, and was supervised by G. Jeffrey Boujoukos. The SEC's litigation will be led by David L. Axelrod and John V. Donnelly.