SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16446 / February 22, 2000
Securities and Exchange Commission v. David M. Mobley, Sr.; Maricopa Investment Fund, Ltd.; Maricopa Index Hedge Fund, Ltd.; Maricopa Financial Corporation; Ensign Trading Corporation; Maricopa International Investment Corporation d/b/a Maricopa Investment Corporation; and IAM Incorporated, Defendants, and Maricopa Eclipse Partners Ltd.; Maricopa Overseas Ltd.; Epworth Financial, Ltd.; Maricopa Capital Management L.C.; Mobley Trading & Investment Corp.; and D. Mobley Incorporated, Relief Defendants, (Civil Action No. 00 Civ. 1316, Southern District of New York) (Casey, J.)
SEC Charges Hedge Fund Adviser With Massive, Seven-Year Fraud
The Securities and Exchange Commission today announced that it filed an emergency enforcement action charging David W. Mobley, Sr., a hedge fund adviser, with defrauding investors of at least $59 million dollars between 1993 and the present. Also charged with fraud were four hedge funds that Mobley created and manages: Maricopa Investment Fund, Ltd.; Maricopa Index Hedge Fund, Ltd.; Maricopa Financial Corporation and Ensign Trading Corporation. Mobley, age 43, is a resident of Naples, Florida.
The Commission's complaint charges the following: Mobley falsely claimed that his funds averaged a return of 51 percent per year, net of his management fees of 30 percent; in reality, he lost an estimated $59 million of the more than $140 million given him to invest between 1993 and the present. Each month, Mobley sent investors monthly account statements that grossly overstated their account balance and rate of return. He failed to disclose to his investors that he had invested their money in a number of his own business ventures-including a mortgage company, a golf and country club development, a research and polling company, a cigar lounge, and a plan to build a stadium on a golf course-most of which failed, or that he had given $3.5 million of their money to various charities. Recently, he falsely claimed to have $450 million under management, when he actually had no more than $33 million of investor funds left.
The complaint further alleges that Mobley diverted millions of dollars of investor funds to pay for a luxurious lifestyle for himself and his family. He is currently paying himself a salary of $1 million a year, and helped himself to a $2 million bonus on January 28, 2000-after he knew he was under investigation by the Commodity Futures Trading Commission. He recently purchased a $98,000 Porsche. He also bought a number of houses using investor funds. In 1994, he bought an $864,000 home in Naples, Florida. Two years later, he bought a $1 million lot, also in Naples, on which he planned to build a new home. In 1996 and 1998, he bought two homes for his sister and daughter. In May 1999, he paid nearly $1.7 million for a new vacation house outside of Vail, Colorado, and spent another $300,000 finishing and furnishing it. The same month, he presented his wife with a $40,000 diamond ring. None of these diversions were disclosed to the investors.
The complaint charges Mobley and the four hedge funds with violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. Also charged are two entities owned by Mobley, through which he advises the hedge funds: Maricopa International Investment Corporation d/b/a Maricopa Investment Corporation and IAM Inc. The complaint names as relief defendants six other entities owned by Mobley, some or all of which may hold investor assets: Maricopa Eclipse Partners Ltd.; Maricopa Overseas Ltd.; Epworth Financial, Ltd. Maricopa Capital Management L.C.; Mobley Trading & Investment Corp.; and D. Mobley Incorporated.
Mobley and Maricopa Investment Corporation are also charged with violations of Section 206(1) and (2) of the Investment Advisers Act of 1940.
Mobley has consented to an asset freeze and preliminary injunctions and to cooperate with the Commission in preserving investor assets. In addition, the Commission's complaint seeks the following relief: (i) permanent injunctions barring future violations; (ii) disgorgement and prejudgment interest; and (iii) civil penalties.
The Commission thanks the Commodity Futures Trading Commission for its assistance in this investigation. The Commission's investigation into this matter is continuing.
Additional Materials Available on This Topic
David Mobley/Maricopa Investment Funds Case:
Litigation Release 16462: Receiver Appointed in Mobley Casehttp://www.sec.gov/litigation/litreleases/lr16446.htm