U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19079 / February 14, 2005
Securities and Exchange Commission v. Roger A. Householder, et al., United States District Court for the Northern District of Illinois, Eastern Division, Civil Action No. 02-C-4128.
District Court Enters Judgment Against Roger Householder, C.P.A., Householder Accounting Services, Inc. and Apex Capital Management Corporation
The Securities and Exchange Commission announced that on February 7, 2005, the Honorable Blanche M. Manning of the U.S. District Court in Chicago, Illinois entered final judgments against Roger A. Householder, C.P.A. (Householder), Householder's accounting firm, Householder Accounting Services, Inc. (Householder Accounting), and Apex Capital Management Corporation, formerly an investment advisory firm registered with the Commission (Apex Capital). The Court entered the judgments pursuant to these defendants' consent and without their admitting or denying the allegations of the Commission's complaint. The judgments against Householder and Householder Accounting permanently enjoined them from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 and, as to Householder only, from violating Sections 206(4) and 207 of the Advisers Act, and Rule 206(4)-4. The judgment also found Householder and Householder Accounting jointly and severally liable for disgorgement of $2,301,026, plus prejudgment interest thereon, but waived payment of all but $56,870.49 of this amount, and did not impose a civil penalty on these defendants, due to these defendants' demonstrated inability to pay. The judgment against Apex Capital Management Corporation ordered it to pay disgorgement of $96,763.73, plus prejudgment interest on this amount, for a total of $106,877.26.
The Commission's complaint in this civil action alleged that from 1991 through March 2000, Householder acted as investment adviser to a number of accounting clients and acquaintances, individually and acting through his accounting firm. Householder recommended that his clients allow him to manage their investments and that they purchase certain securities through him and Householder Accounting, including promissory notes and interests in several investment funds he recommended. The complaint alleged that in offering these securities, Householder knowingly misrepresented the existence of the entity purportedly issuing the security, the use of proceeds, and the safety of the investment. Householder then misappropriated the assets his clients gave him to manage and the funds his clients gave him to purchase the securities he recommended they buy. The complaint also alleged that Householder defrauded the Aapex Equity Fund, a registered investment company that Householder formed in 1998. Householder made the Aapex Equity Fund's investment decisions through Aapex Equity Advisors, Inc., an investment adviser he formed and for which he was president. The complaint also alleged that on a number of occasions between March and May of 1999, Householder conducted trading on behalf of the Aapex Equity Fund that violated restrictions on concentration of assets and short selling set forth in the Fund's offering materials, resulting in the loss of all of the Fund's assets. The Commission's complaint also alleged that Householder formed Apex Capital Management Corporation, an investment advisory firm for which he was Director of Operations and Accounting Director, and then sold securities in Apex Limited Partnership through fraudulent offering documents that misrepresented Householder's securities industry background and failed to advise investors of Householder's previous disciplinary history. Householder also failed to disclose his disciplinary history in Apex Capital Management's Form ADV filed with the Commission. The complaint also alleged that Householder's investment advisory clients lost more than $2.3 million in these fraudulent schemes.
See also L.R. 17565 (June 14, 2002); L.R. 18660 (April 7, 2004).