SEC Charges Investment Adviser with Fraudulent Securities Offering
Litigation Release No. 24954 / November 3, 2020
Securities and Exchange Commission v. Terrence Chalk, et al., No. 20-civ-09199 (S.D.N.Y. filed November 3, 2020)
The Securities and Exchange Commission today charged an unregistered investment adviser, who allegedly concealed his criminal past, with defrauding his clients through the offer and sale of investments in a fictitious investment fund, and misappropriating a large portion of the funds raised.
According to the SEC's complaint, from 2017 to 2020, Terrence Chalk, of Passaic, New Jersey and Orlando, Florida, raised approximately $5 million for the fictitious fund from approximately 40 investors. The complaint alleges that Chalk, who was previously convicted of identity theft and bank fraud, used the alias "Dr. Terrence Cash" to conceal his identity and criminal past from investors and held himself out as a successful investment adviser and the chairman and founder of a network of entities he referred to as "Greenlight." The complaint further alleges that Chalk promised investors a regular dividend of no less than 12% per year and advised his clients to transfer their existing retirement accounts and other savings to newly established accounts at a self-directed IRA custodian in order to invest in the fictitious fund. According to the complaint, instead of investing the funds as promised, Chalk and entities he controlled, including Greenlight Advantage Group Inc. and Greenlight Investment Partners Inc., misappropriated the vast majority of invested capital, with Chalk using more than $700,000 to pay personal expenses. As alleged, to perpetuate and conceal the fraud, Chalk and the Greenlight entities also used approximately $1.8 million of investor money to make purported dividend payments to prior investors in Ponzi-like fashion.
In a parallel action, the U.S. Attorney's Office for the Southern District of New York earlier today filed criminal charges against Chalk.
The SEC's complaint, filed in U.S. District Court for the Southern District of New York, charges Chalk, Greenlight Business Solutions Inc., Greenlight Consulting Corp., Greenlight Advantage Group Inc., and Greenlight Investment Partners Inc. with violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also charges Chalk, Greenlight Business Solutions Inc., and Greenlight Consulting Corp. with violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act, and charges Chalk with violations of the antifraud provisions of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 and the control person provisions of Section 20(a) of the Exchange Act. The SEC seeks injunctive relief, civil penalties, and disgorgement of ill-gotten gains plus prejudgment interest.
The SEC's Office of Investor Education and Advocacy encourages investors to ask questions before investing and to review investor alerts, including those on Ponzi scheme red flags and Questions to Ask When Hiring an Investment Professional. Additional information is available on Investor.gov and sec.gov.
The SEC's investigation was conducted by Derek M. Schoenmann, Thomas Feretic, and Celeste Chase of the SEC's New York office. The SEC's litigation will be led by Mark R. Sylvester and Mr. Schoenmann, and the case is being supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation.