Firm, CEO Settle Claims for Additional Investments in Scheme Involving Life Settlements

Litigation Release No. 24100 / April 5, 2018

Securities and Exchange Commission v. William R. Schantz III and Verto Capital Management LLC, Civil Action No. 17-cv-03115 (D.N.J.) (May 4, 2017)

On February 27, 2018, the United States District Court for the District of New Jersey entered an amended judgment against New Jersey-based Verto Capital Management LLC and its CEO, William R. Schantz III, of Moorestown, New Jersey. The defendants had previously agreed to pay more than $4 million to settle charges that they used new investor money to repay earlier promissory note investors, tapped investor funds for the CEO's personal use, and made misrepresentations to investors about the safety of the notes and life settlement collateral underlying them. As reflected in the amended judgment, defendants have agreed to pay an additional $620,594 to cover investments that were identified after the initial judgment and to correct the amount of interest owed to some investors on certain notes. Without admitting or denying the allegations, defendants consented to this additional relief as well as the pledge of a policy and property to repay investors. A Fair Fund has been created and has been returning money collected in the settlement to harmed investors.

The SEC's investigation was conducted by Jennifer K. Vakiener, Vincent T. Hull, Jack Kaufman, Christopher Mele, Thomas Feretic, and Steven G. Rawlings in the New York office. The case is being supervised by Lara S. Mehraban. The SEC examination that led to the investigation was conducted by Steven C. Vitulano, Terrence P. Bohan, and Edward J. Janowsky in the New York office.