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Archives for: June 2010, 28

SEC Claims Palm Beach Investment Adviser Ran Ponzi Scheme

By Securities Law on Jun 28, 2010 | In Legal Actions

Stealing client funds, misappropriating investor monies, and receiving million dollar salaries are once again included in the list of charges filed by the Securities and Exchange Commission (SEC) against an alleged Ponzie schemer. The Palm Beach Gardens investment adviser, Trade-LLC, and its managing members, Philip W. Milton and William Center were named in a civil suit filed by the SEC in the U.S. District Court for the Southern District of Florida on June 22, 2010.

The SEC alleges that Trade-LLC, Milton and Center solicited their services to Cash Flow Financial LLC, New Life Club LLC and DC Advisors LLC, with more than 800 members nationwide. Between 2007 and 2009 they raised nearly $28 from the three private investment clubs by allegedly telling the clubs that they would be using investor money to trade securities on the clubs’ behalf using its purported proprietary software trading program.

According to the SEC’s complaint, the clubs received reports from Trade-LLC purportedly showing that they were making returns of up to 8% a month, or approximately 100% on an annualized basis. In reality, Trade-LLC sustained trading losses of more than $2 million in total.

Trade-LLC, Milton and Center reportedly operated the Ponzi scheme by using investor funds received from the clubs to pay back to them more than $1 million in fictitious profits. Milton and Center allegedly misappropriated the clubs’ money to pay their salaries of more than $2 million and $1 million respectively, as well as other personal and business expenses.

The complaint also named three companies, BD LLC, TWTT-LLC and CMJ Capital LLC, controlled by Milton and Center that received proceeds from the scheme, as relief defendants. Milton and Center allegedly transferred over $4.8 million of the clubs’ funds to the three companies without any legitimate basis.

Trade-LLC, Milton and Center were all charged with violating the antifraud provisions of the federal securities laws. Trade-LLC, Milton and the relief defendants have agreed to settle the charges. Trade-LLC and the relief defendants have consented to an asset freeze and to disgorge all of the funds that the court determines they received from the fraudulent scheme. Milton has been directed to disgorge $2,351,963 in proceeds he received from Trade-LLC and to pay a $130,000 civil money penalty. Trade-LLC will also pay a civil money penalty in an amount to be determined by the court.