SEC Freezes Assets Of Massachusetts Advisor Over Alleged Theft Of Client Funds

Eliane Chavagnon Reporter 19 March 2013

SEC Freezes Assets Of Massachusetts Advisor Over Alleged Theft Of Client Funds

The Securities and Exchange Commission has frozen the assets of a Massachusetts-based investment advisor who allegedly stole money from clients who were made to believe that they were investing in a hedge fund.

The US authority alleges that Gregg Caplitz and Insight Onsite Strategic Management raised at least $1.1 million from clients from about 2009 and used it for purposes other than investing in the hedge fund they purported to manage.

Investor money was transferred to the firm’s chief investment officer and other members of her family who used it for personal expenses. The authority claims that instead of using investor funds to buy shares in a hedge fund or to manage or develop a hedge fund, Caplitz transferred control of client money to Rosalind Herman, his friend who works at the firm.

Meanwhile, investor funds were also transferred to her two sons and daughter-in-law, as well as a firm they owned in Las Vegas called The Knew Finance Experts.

Furthermore, the SEC alleges that, as part of his scheme, Caplitz obtained funds from a real estate investment trust by falsely representing that a hedge fund he operated was interested in making an investment in that trust. The public, non-traded REIT gave $135,000 to Caplitz so he could conduct due diligence on the REIT as a precursor to making a $5 million investment that never materialized.

The SEC’s complaint - filed in federal court in Boston, MA - seeks a permanent injunction plus disgorgement, prejudgment interest and a penalty against Caplitz and his firm. It also names the four Hermans and The Knew Finance Experts as relief defendants and seeks disgorgement plus prejudgment interest.

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