SEC Charges Ohio Investment Adviser with Defrauding Retail Investors

Litigation Release No. 24902 / September 17, 2020

Securities and Exchange Commission v. Scott Allen Fries, No. 1-20-cv-00739 (S.D. Ohio filed September 17, 2020)

The Securities and Exchange Commission today charged Scott Allen Fries, a former Ohio-based registered representative and investment adviser representative at an SEC-registered broker-dealer and investment adviser, with defrauding at least seven investors out of at least $178,000.

According to the SEC's complaint, Fries recommended that certain individuals, including several of his brokerage customers and their relatives, provide him funds to invest outside of his relationship with the registered broker-dealer and investment adviser. Between January 2016 and March 2019, at least seven people allegedly gave Fries a total of at least $178,000 to invest. As alleged in the complaint, Fries betrayed the investors' trust and spent their money on his own personal expenses. To cover up his fraud, Fries allegedly created fake account statements, lied to his employer, and used a Ponzi-like scheme to repay a couple who demanded return of their investment with funds from other investors.

The SEC's complaint, filed in federal district court in the Southern District of Ohio, charges Fries with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The complaint seeks a permanent injunction, disgorgement with prejudgment interest, and a civil penalty.

The SEC's investigation was conducted by Jedediah B. Forkner, Keith Constance, and Anne C. McKinley of the Chicago Regional Office. The litigation will be led by Robert M. Moye. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.