U.S. SECURITIES & EXCHANGE COMMISSION
Litigation Release No. 17711 / September 4, 2002
SEC SUES INVESTMENT ADVISER FOR MISAPPROPRIATING OVER $5,000,000 FROM 26 CLIENTS
SECURITIES AND EXCHANGE COMMISSSION v. FRED ALBERT SCHLUEP
United States District Court for the Northern District of California, Civil Action No. C-02-4193-EDL
The Securities and Exchange Commission ("SEC") today announced the filing of a civil injunctive action against Fred Albert Schluep, an investment adviser, formerly doing business as CRA Financial Planners in San Mateo, California. The complaint alleges that from September 1991 to March 2001, Schluep took in excess of $5 million from 26 of his clients, without their consent or authority, by forging the clients' signatures on checks and fund transfer documents. The complaint also states that Schluep took money from two investors by telling them that he would invest their money in safe investments; instead, Schluep transferred these funds to other clients. According to the complaint, Schluep lulled his clients into believing that the misappropriated funds would be repaid by giving them checks that were returned for insufficient funds, or by paying them with money from other clients' accounts. The complaint states that Schluep used the stolen client funds to invest primarily in local real estate and business ventures, and he used approximately $100,000 for personal expenses. Schluep now resides in Red Bluff, California.
In its complaint filed in the United States District Court for the Northern District of California, the SEC charges Schluep with violations of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC's complaint seeks to enjoin Schluep from committing future violations of the securities laws, to compel Schluep to disgorge any illegal profits plus prejudgment interest, and to pay civil monetary penalties.