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U.S. SECURITIES & EXCHANGE COMMISSION

Litigation Release No. 17946 / January 22, 2003

SECURITIES AND EXCHANGE COMMISSSION v. FRED ALBERT SCHLUEP

United States District Court for the Northern District of California, Civil Action No. C-02-4193

The Securities and Exchange Commission announced that, on October 9, 2002, the Honorable Charles E. Breyer, United States District Judge for the Northern District of California, entered a judgment of permanent injunction against defendant Fred Albert Schluep, an investment adviser formerly doing business as CRA Financial Planners in San Mateo, California. The judgment restrained and permanently enjoined Schluep from violating Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.

Schluep consented to the entry of the judgment without admitting or denying the allegations against him in the Complaint that the Commission filed on September 4, 2002. The Commission's Complaint alleged that from approximately September 1991 through March 2001, Schluep misappropriated over $5 million from at least 26 clients by forging their signatures on checks and other documents, and lying to them, in order to obtain their investment funds. The Complaint further alleged that Schluep lulled his clients into believing that the misappropriated funds would be repaid by paying them with money from other clients' accounts, or giving them checks that were later returned for insufficient funds.

The Commission's Complaint also alleged that Schluep used his clients' funds to pay approximately $1.5 million to maintain a commercial property in Berkeley, California; $538,0000 to acquire a commercial property in South San Francisco, California; and $750,000 to support an automotive brake company in Concord, California. According to the Complaint, Schluep also used approximately $100,000 of his clients' funds to pay personal expenses.

In addition to a permanent injunction against Schluep, the Commission's Complaint sought a judgment requiring Schluep to pay penalties, and requiring Schluep and relief defendant Howard G. Sylvester to disgorge ill-gotten gains and pay prejudgment interest. Sylvester allegedly received ill-gotten gains of approximately $955,000.

On January 22, 2003, the Commission instituted settled administrative proceedings against Schluep based on the entry of the civil injunction against him. Without admitting or denying the Commission's findings, Schluep consented to the entry of the Commission's order, which bars him from association with any investment adviser.

For further information, see Litigation Release No. 17771 (September 4, 2002).

 

http://www.sec.gov/litigation/litreleases/lr17946.htm


Modified: 01/23/2003