The U.S. Securities and Exchange Commission (SEC) has ordered fund manager and former insurance agent Ronald A. Fossum Jr. to pay $1.3 million as part of a judgment in a suit accusing him of using investor money for personal expenses.
The judge ordered Fossum to pay back what he took, plus interest, as well as a $320,000 civil penalty. The $1,271,552.46 was ordered to be paid to the SEC within 14 days after the judgement. Fossum also has been barred from working in the securities industry.
Fund Manager Used Elaborate Scheme to Con Investors
The SEC alleged that Fossum owned and controlled three funds — Smart Money Secured Income Fund LLC, Turnkey Investment Fund LLC, and Accelerated Asset Group LLC — and two other entities, which he used to raise funds from investors. Beginning in 2011, Fossum allegedly used the three funds to raise more than $20 million over the course of five years.
According to filings, Fossum told investors that he charged little or no fees, attracting more than 100 investors. Fossum then used the money for personal expenses, including expensive travel to far-flung locations and rent for a home that one of his funds owned.
In addition to misappropriating money to fund his lifestyle, Fossum commingled fund assets and misled investors about the struggling condition of one of the funds. According to the SEC, the funds and their managing entities filed for bankruptcy in late 2017. There is little chance that investors would be repaid.
SEC Still in Pursuit of Fund Manager’s Business Associate
The SEC also is pursuing action against Fossum’s business associate, Alonzo R. Cahoon. Cahoon is the former manager of the Turnkey Investment Fund.
The SEC has accused Cahoon and Fossum of defrauding the Turnkey Fund and its investors by claiming that they would charge a one-time management fee of $2,990 per investment unit. In reality, the two took $20,000 or more from each investment unit sold. Court records show that Cahoon has denied the allegations and is seeking a trial before a jury.
Have You Lost Money Investing with Ronald A. Fossum Jr.?
If you lost money investing with Ronald A. Fossum Jr. or think you may be a victim of stockbroker misconduct, contact an experienced investment fraud attorney today.
The investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. represent individual and institutional investors who have lost money as a result of stockbroker misconduct, misrepresentation and more.
Our AV-rated* lawyers have extensive experience litigating a broad range of investment disputes and we will aggressively pursue claims to recover your investment losses.