SEC Halts Fraudulent Investment Scheme by Purported Trader in Dallas-Fort Worth Area
FOR IMMEDIATE RELEASE
Washington, D.C., Feb. 24, 2011 – The Securities and Exchange Commission has obtained an emergency court order halting an alleged offering fraud conducted by a purported trader in the Dallas-Fort Worth area. The order was unsealed by the court today.
The SEC alleges that Christopher Love Blackwell sold investments in a phony fixed income trading program by enticing investors with promises of risk-free, guaranteed monthly investment returns as high as 30 percent. Blackwell assured investors he was an experienced trader and advisor in a variety of securities and services including hedge funds and international bank instruments. However, instead of investing client funds as promised, Blackwell spent nearly $3 million in investor money on questionable unrelated business activities as well as such personal expenses as child support, gentlemen’s club entertainment, and purchases of expensive vehicles. He also made approximately $500,000 in Ponzi-like payments using money from new investors to pay earlier investors.
Neither Blackwell nor his two firms also charged in the SEC’s enforcement action have ever registered with the SEC or any state regulator to sell securities.
“Blackwell concocted a resume boasting degrees he never earned, work experience he never had, and personal connections he didn’t make,” said Rose Romero, Director of the SEC’s Fort Worth Regional Office. “Blackwell enticed investors by promising exorbitant returns and assuring that their principal amount would be held safely in an escrow account. In reality, Blackwell was misappropriating their money in a myriad of ways.”
The Honorable Sam A. Lindsay, U.S. District Judge for the Northern District of Texas, granted the SEC’s request for emergency relief on February 11, including an order temporarily restraining Blackwell from committing further violations of the antifraud provisions and an order freezing Blackwell’s assets.
According to the SEC’s complaint filed on February 7 in U.S. District Court for the Northern District of Texas, the SEC worked closely with law enforcement agents from U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) on the case. Blackwell came under ICE HSI attention due to large wire transfers and cash transactions. While pitching his trading program to an undercover ICE HSI agent whom Blackwell thought was a wealthy potential investor, he made numerous false and misleading representations including risk-free returns of “25 to 30 percent per month with regularity.” Blackwell falsely claimed that these profits were possible because of his purported academic pedigree that including Master’s and Ph.D. degrees from the University of Madrid. Blackwell has no such degrees.
According to the SEC’s complaint, during a Feb. 11, 2010, face-to-face conversation with an undercover agent, Blackwell touted the know-how and connections he acquired while employed by Goldman Sachs and The Bank of Madrid. In reality, Blackwell never worked at either firm.
The SEC alleges that Blackwell misused investor money to pay more than $720,000 in personal and business expenses, including child support, travel, entertainment (including gentlemen’s clubs), utilities, food, office equipment and supplies, office rent, and purchases of an Audi, Hummer and other vehicles. Blackwell also funneled more than $900,000 in cash directly to himself, family members, friends and other associates. He further diverted investor funds to support other questionable business activities, including roughly $249,000 purportedly used to fund a personal entertainment investment and roughly $1.1 million to purchase interests in sham letters of credit. Separately, Blackwell used more than $500,000 to make Ponzi-like payments.
The SEC's complaint charges, among other things, that Blackwell and his entities violated the anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. In addition to the emergency and interim relief that has been obtained, the SEC seeks a final judgment permanently enjoining Blackwell and his entities from future violations of the relevant provisions of the federal securities laws and ordering them to pay financial penalties and disgorgement of ill-gotten gains with prejudgment interest.
The SEC thanks ICE HSI for its assistance in this matter.
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For more information about this enforcement action, contact:
Stephen J. Korotash
Associate Regional Director, Fort Worth Regional Office
Regional Trial Counsel, Fort Worth Regional Office