Washington-Based Investment Adviser Settles Charges of Multi-Million Dollar Scheme
Litigation Release No. 24166 / June 15, 2018
Securities and Exchange Commission v. Ronald A. Fossum, Jr. and Alonzo R. Cahoon, No. 2:17-cv-01894 (W.D. Wash. filed Dec. 19, 2017)
On June 7, 2018, a federal district court in the Western District of Washington entered a final consent judgment against Snohomish, Washington resident Ronald A. Fossum, Jr.
According to the SEC's complaint, Fossum misappropriated hundreds of thousands of dollars of investor funds he raised through unregistered securities offerings of three investment funds he owned and controlled: Accelerated Asset Group, LLC; Smart Money Secured Income Fund, LLC; and Turnkey Investment Fund, LLC. The complaint alleged, among other things, that Fossum used fraudulent statements and material omissions to induce more than one hundred investors to invest in his funds, and that he repeatedly breached his fiduciary duties to the funds by indiscriminately commingling fund assets to satisfy the funds' liquidity needs.
Without admitting or denying the SEC's allegations, Fossum consented to the entry of a final judgment, permanently enjoining him from violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and (2) of the Investment Advisers Act of 1940. The final judgment against Fossum also orders him to disgorge $840,729, plus prejudgment interest of $110,823, orders him to pay a civil penalty of $320,000, and imposes a conduct-based injunction that enjoins him from participating in the issuance, purchase, offer, or sale of any security other than for his own personal account.
Separately, the SEC instituted settled administrative proceedings against Fossum, based on the final judgment entered against him, pursuant to which Fossum, without admitting or denying the SEC's findings, agreed to be barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization. Fossum also agreed to be barred from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock.
Litigation is continuing as to the SEC's claims against the remaining defendant in the case, Alonzo R. Cahoon, with no trial date currently set.
For further information, see Litigation Release No. 24017 (December 20, 2017).