SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17237 / November 16, 2001
SEC OBTAINS TEMPORARY RESTRAINING ORDER AND ASSET FREEZE AGAINST MONEY MANAGER ALFRED M. LEMCKE BASED ON CLAIMS HE DEFRAUDED HIS CLIENTS OF $1 MILLION
SEC v. Alfred Lemcke (United States District Court for the District of Rhode Island, Civil Action No. 01547-L).
The Commission today obtained a temporary restraining order, an asset freeze and other emergency relief in federal district court in Rhode Island against money manager Alfred M. Lemcke, 42, of Hingham, Massachusetts. The court granted the emergency relief against Lemcke based on the Commission's allegations in its complaint, filed today, that Lemcke defrauded his investment advisory clients of approximately $1 million. The Commission alleged in its papers that, beginning in December 1995 and continuing until September 2001, Lemcke, an unregistered investment adviser who conducted business under the name Lemcke & Associates, misappropriated funds from several clients in Rhode Island, Massachusetts and Maine, including a friend who was Lemcke's best man at his wedding. According to the Commission, Lemcke went on to defraud his friend's sister, her children, her ex-husband, her ex-husband's parents and even a neighbor who was renovating Lemcke's kitchen.
The Commission alleged in its Complaint that Lemcke told his clients he would invest their money in various stocks, mutual funds and other securities through a financial services company based in Chicago. He even provided them with periodic account statements indicating that their investments were generating substantial returns. However, the financial services company, the returns and the investments themselves did not exist.
The Commission further alleged that, when one client pressed Lemcke for information, Lemcke claimed that the records from the client's investments were lost in the World Trade Center terrorist attacks. He also used the attacks as an excuse to cancel a September 13, 2001 meeting with two elderly investors, saying that he needed to attend the funeral of a colleague -- from his non-existent financial services firm - who had died during the September 11th attacks. According to the Commission, Lemcke admitted later in September to a client that he had not invested the money as represented, that the financial services company did not exist and that he had used the money his clients had invested with him to support his lifestyle and to repay a loan.
The Commission alleged in its Complaint that Lemcke violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. It obtained entry of an order temporarily restraining Lemcke from directly or indirectly continuing to violate the federal securities laws, an asset freeze, and prohibitions against the destruction or alteration of documents. A hearing on the Commission's request for a preliminary injunction has been set for November 26, 2001.