SEC Wins Final Judgment Against Ohio Businessman in Multimillion-Dollar Offering Fraud
Litigation Release No. 24617 /September 25, 2019
Securities and Exchange Commission v. William M. Apostelos, et al., Civil Action No. 1:15-cv-00699 (S.D. Ohio, filed October 29, 2015)
On August 21, 2019, a federal district court in Ohio granted the Securities and Exchange Commission's motion for summary judgment and entered a final judgment against former Ohio resident William M. Apostelos for operating a multimillion-dollar scheme that defrauded hundreds of investors. Apostelos is currently serving a 15-year federal prison sentence imposed after he pleaded guilty to related criminal charges in February 2017.
The SEC alleged that Apostelos and three businesses he controlled, WMA Enterprises, LLC (WMA), Midwest Green Resources, LLC (Midwest Green), and OVO Wealth Management, LLC (OVO), knowingly made material misrepresentations to prospective investors, telling them that their funds would be invested in stock, precious metals, or real estate. The complaint further alleged that, in reality, those funds were used to make Ponzi-like payments to earlier investors and promoters, finance other businesses Apostelos and his wife owned, and pay for personal expenditures.
Judge Thomas M. Rose of the United States District Court for the Southern District of Ohio ruled that the SEC was entitled to summary judgment on all of its claims, which included charges that Apostelos made material misrepresentations to investors in the offer and sale of securities and while acting as an investment adviser, offered and sold unregistered securities, acted as an unregistered broker, and aided and abetted and was liable as a control person for violations of his companies. The court entered a final judgment against Apostelos, permanently enjoining him from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and Section 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder, and the registration provisions of Sections 5(a) and 5(c) of the Securities Act and Section 15(a) of the Exchange Act. The court also ordered $11,194,472 in disgorgement of ill-gotten gains, and $587,371 in prejudgment interest thereon, with the amounts deemed satisfied by the over $32 million restitution and forfeiture ordered against him in the criminal case.
On October 1, 2018, the court granted default judgment against the other defendants and relief defendants in the SEC case. The court entered an order enjoining WMA, Midwest Green, and OVO from violating the antifraud and registration provisions of the securities laws. The court also ordered WMA, Midwest Green, and OVO to pay disgorgement and prejudgment interest of $11,781,844, jointly and severally with Apostelos, and in parts, jointly and severally with relief defendants Connie Apostelos, Apostelos Enterprises, Inc., Coleman Capital, Inc., and Silver Bridle Racing, LLC, which order was deemed satisfied by the criminal restitution and forfeiture orders entered against Apostelos. The court further ordered the four relief defendants to pay disgorgement and prejudgment interest, which also was deemed satisfied by the criminal restitution and forfeiture orders.
On September 11, 2019, the SEC separately instituted administrative proceedings against Apostelos to determine what, if any, remedial actions are appropriate.
The SEC's investigation was conducted by Meredith J. Laval and Luz M. Aguilar and supervised by Amy S. Cotter of the Chicago Regional Office. The litigation was conducted by John E. Birkenheier and Ms. Laval.
The SEC's Retail Strategy Task Force and Office of Investor Education and Advocacy (OIEA) encourage investors to check the background of anyone selling or offering them an investment using the free and simple search tool on Investor.gov.
For additional information, please see Litigation Release No. 23397.